Money Talk 9-5-26

0:00Money Talk, the Annex Wealth Management Show is hosted by Annex Wealth Management, a fee-only registered investment advisor. Important information about the qualifications and business practices of Annex is available at AnnexWealth.com. Different types of investments involve varying degrees of risk. Please consult with a qualified fiduciary advisor about your specific situation. Annex Wealth Management is a local fee-only fiduciary providing investment retirement, tax and estate planning. Know the difference. Financial planning at every level. Annex Ignite. Annex Comprehensive Wealth. Annex Private Client. This is Money Talk, the Annex Wealth Management Show on WTMJ. The August job surprise. Big number blowout. This is Money Talk, the Annex Wealth Management Show. Great to have you listening on the radio or on the podcast. Chief Economic Strategist Dr. Brian Jacobson is here.

1:00Hey, Brian. Hey, it's great to be here. And Chief Growth Officer at Annex, Mark Beck. Brian, you know, lots of fun stuff, kind of we can review. One of the things to start with is a conversation about Jackson Hole, which I love it every time that is in the news. That's an amazing place. And super cool that all of our world leaders of finance converge upon that, right? But coming out of that, the sort of repricing of the expectation for the next Fed meeting in terms of rate hikes is pretty dramatic. It was perhaps the most rapid repricing that I have seen. Now granted, the data that I've looked at only really goes back to the 1990s. So I can't say like in all of history. I'm sure there have been other surprises, but it was a very abrupt about face with the markets as far as thinking that chairwarsh is going to be somewhat doves, maybe leaning towards staying on pause. And then he delivered that speech at Jackson Hole. And all of a sudden it was just a complete turnaround in terms of higher probability that they'll likely hike during their September 15th to 16th meeting.

2:02A lot of it was because he made the case for saying that the jobs market is solid and that he's really singularly focused on inflation. They have seen improvement, but two months of improvement isn't really enough for him. And then we get that jobs report on Friday plus 162,000. I mean, that was just, I had to look at it twice to make sure I wasn't misreading it. So it really does, I think, almost put the nail in the coffin of the idea that they need to stand pause to support the labor market. It's more a question of do they feel like they need to hike rates in order to stave off a resurgence and inflation? Right. And what that brings back into crystal clear for investors, the focus around how are we investing on the fixed income side? And when we see the expectation for rate hikes jump as dramatically as it did. So the longer term bonds, the yields go up, right? So what happens then, the price, so if we're a current holder of that bond, you can see the value of that bond go down. So this year in 2026, so far what you're seeing is that longer duration fixed income investments are showing a total return

3:12that's much more muted than what you're expecting to see if you just look at the size of the yield itself. Oh, absolutely. You start with that yield and let's say you start by looking at, oh, it's like 4.77, it's 4.8 or whatever it is. That isn't necessarily the return that you're going to get, especially if you sell it before it matures. When you see that yield, it's based on an assumption. It's based on an assumption that you're going to get all of those cash flows. What's called the coupon that it kicks off. So that's the periodic interest payment. And then that you're also going to get the face value when it's matured. Furthermore, it assumes that you can reinvest those coupon payments at the same rate. I mean, that's how you calculate the yield. There's a lot of math that goes into it. So people see that yield and they're like, oh, this is guaranteed. It is not guaranteed. And that's one of the big mistakes that some people use. They might be what we sometimes refer to as yield hogs where they want to just get the highest yielding thing that they can. It's like, that's not a guarantee. Now, when it comes to like treasury securities, if you do purchase them,

4:15and if you can hold them to maturity, that beginning yield is usually a pretty good indicator of the return that you will get. It might be plus or minus a little bit. It's a huge difference between if you're holding bonds in like an ETF or a mutual fund, or if you're holding the bonds individually and can hold them to maturity. I think very important for people to realize that the bond side of the portfolio requires attention just like the stock side of the portfolio. And I think sometimes people sort of forget that. So how am I invested in fixed income? What types of fixed income? What is the structure to I own mutual funds? Do I own exchange traded funds? Do I own the individual bonds? Have I maybe appropriately ladder the bonds such that I can hold them to maturity so I can capture that yield that was there? When I first purchased, the guaranteed part by the way is the coupon payment and the principal payment. Also, by the way, guaranteed but subject to the strength of the creditors. That's right. From whom are you buying the bonds? Exactly. So it depends on them not defaulting on it.

5:17And that's a big difference between if you're buying a treasury security versus a corporate bond. You know, corporations, they can go bankrupt. We really focus on high quality bonds, those that we have high confidence that are going to be able to meet those obligations. But it's not a guarantee. When you have a treasury security, that's backed by the full faith and credit of the US government. Very different. And so, you know, each one plays an important role in a portfolio. But do recognize that if you're going to go for a little bit more of that yield, which you can see on corporate bonds, along with that comes a little bit more risk as well. So in a cute focus on inflation, let's just talk a little bit about oil. You know, oil, not only just the cost of gas at the pump, but also it's in everything from transportation to the things that we consume. Stubbornly high oil prices. Of course, we got to talk about Iran. We got to talk about Venezuela. What are we seeing going on there? It feels like it's almost stuck in limbo. Are we at war? Aren't we? It's this weird tension where sometimes it becomes they've used the phrase kinetic to say, well, things are blowing up.

6:19Right. I mean, that does happen. That's what we saw earlier this week. There's a little bit more of the conflict. And so we did see the price of oil go up again. We also got the announcement about some big deal with Venezuela with their 65 billion barrels of oil. As far as known reserves that they have that the US is going to have some claim to those. As we've been getting more details about it, it seems like that is something that can maybe be beneficial to oil supply security over the course of years. Maybe not over the course of weeks or months just because of the amount of time and investment that it takes to really extract that oil. So long term could be a really good deal. Short term probably doesn't help fix the problem. Now with Labor Day weekend, nationwide average gasoline prices around $4.15 per gallon. That's squeezing a lot of consumers again at perhaps the most inconvenient time. If your portfolio isn't where you hope it would be or you feel like you want to understand more, maybe it's time for a second look and experience team at annex with the technology ready to offer guidance clarity and a plan built around your goals up to an in retirement.

7:29No selling, no sales pitches. Click get started at annex 12.com. That's your first step. An in person review or video visit. Maybe there's a better way. This is Money Talk, the annex wealth management show at 620 WTMJ custom tainted investment and retirement planning from a fee only fiduciary. Know the difference. This is Money Talk, the annex wealth management show on WTMJ. Know the difference with annex wealth management paying for college. One of the biggest financial challenges families face. Lot of different options and the planning often starts earlier than many expect from setting clear expectations with your kids to understanding saving tools, financial aid loans. We're talking with Rebecca Poznick financial planning specialist about how to build smart, flexible strategies that support your child's future without putting your own financial security at risk. You've seen quite a lot of this, Rebecca over the years. Thanks for being on the show again. Thanks for having me.

8:30When should parents realistically start planning and saving for college? I know that it depends question, but how do you decide how much to cover with your kids and how do you get them involved? Yeah, before even thinking about the costs and the funding, I think it's very important for parents to think about their intentions for funding their child's education. On one end of the spectrum, I see some clients who want to pay for everything. And at the other end, some clients who don't want to pay for anything. And plenty of people that fall somewhere in the middle, and as you can imagine, it's very hard to come up with a plan if we don't know what the parents' goals are. So I've seen the most success when parents think about this early on. They have conversations with their kids earlier on in that college search process. So everyone in the family is very clear about what role the parents want to play and what's expected of the kids. One especially important thing to think about is whether they do want their kids to contribute.

9:30I think there's something to be said for kids financially contributing to their own education. They might take it a little bit more seriously or it might be a little bit more impactful if they have some financial skin in the game. 529 plans. Maybe you've heard about those. How can families make the most of those? These are one of my favorite college savings vehicles. And that's because they are so flexible. You can start these right away when the child is born. And just contributing a little bit each month can really make an impact over time when you have those contributions, you're investing them and you have 18 years for them to grow. Now I have heard from some clients in the past that they're nervous about locking the funds away in a 529 plan when they don't even know if their kids are going to college. But these plans are so flexible now that's really been the trend over the last few years and they can be used for apprenticeship expenses, K-12 expenses, certain credentials.

10:32You can change the beneficiary and sometimes you can even roll apart of it over to a Roth IRA. So they're a great tool for grandparents to save. They're a great tool for legacy. There are so many advantages to these that it's really something I recommend for most people to consider. Yeah, you at least want to start that 529 plan. We've done segments on unused 529 money. But keep in mind it can be used for education before college too. So how should families approach financial aid to kind of maximize their opportunities when it comes to that? Well, something that I hear pretty often is that parents don't want their kids to have any student loan debt at all. And that's a great sentiment. Wanting to limit debt, especially at higher interest rates is great. But one thing that I have to say is I wouldn't be afraid of taking on a little bit of student loan debt. A lot of times, and especially with the federal student loans, the terms tend to be a little bit more favorable than your average loan.

11:34So it's not necessarily a bad thing to take on a little bit of debt. It might even help the student build their credit score a little bit. And once you get your financial aid package back from a school too, you can see the loans on there. You can see what kind of grants or other opportunities they might have. And sometimes you can negotiate these a little bit. There might actually be a little bit more financial aid out there. So sometimes you can go back to the school and negotiate that. And so then how do you help parents weigh the cost of different schools? Because there's so many to choose from and a lot of different financial aid packages, like you just said, and against the long-term value for their child. There are, and having conversations in advance about what are realistic schools and what are wish list schools. I've seen plenty of people whose kids applied to some very good and expensive schools. But in advance of that, they talk with their kids and let them know that it might just be out of their price range. On the flip side, I've also had clients who really wanted their kids to go to a more prestigious school.

12:40I had one where the parents had gone there and they really enjoyed their time and they wanted the same for their kids, of course. We were working on a plan so they could afford it. But we actually found out that one of the kids wasn't super excited about going there. They found a program they really liked somewhere else. They liked the campus life somewhere else a little bit better. What we really learned from that is it's not about the prestige, it's not even about the cost. It's about making sure the school is a good fit for the kid. Is it a place where they can actually grow and learn and be a good student? That's what it's about at the end of the day. If the kid doesn't have a good experience there, if they're not succeeding, then was it really worth it? She is financial planning specialist Rebecca Pozig. Thank you for being on the show again, Rebecca. Thanks for having me glad to be here. Click the get started button at annexwealth.com. Financial planning at every level. Annex Ignite. Annex Comprehensive Wealth.

13:41Annex Private Client. This is Money Torn. The Annex Wealth Management Show on WTMJ. Hate more in-person events coming up single in retirement, understanding your pension potential. Financial conversations we keep avoiding, that's part of our Women in Wealth series. Maybe some conversations that we shouldn't be avoiding. Informative webinars as well. Navigating the markets. Inflation trends are in-house team. Love to share this free education, this knowledge with you, and meeting you in person. So click events at the top of the page at annexwealth.com. Reserve your spot spaces limited for the in-person events. And our webinars, you can set a reminder. And we love taking your questions live. I know sometimes you're busy, but you know, a lot of times we do get some questions. Great questions for navigating the markets. Inflation trends, a lot of things to keep an eye on, especially with the jobs numbers coming out. And earning season. Chief economic strategies. Dr. Brian Jacobson is your host for those webinars. Let's talk about navigating the markets. That covers a little bit more of a broad series when it comes to the market.

14:44It really does. So the instant insights are supposed to be almost like kind of quick hit, instant reaction after we've done lots of research on the topic. But what does this specific thing mean? Whereas navigating the markets is really tying it all together as far as everything that we've seen. Not just as far as jobs, the fed and inflation, because that's the main focus of instant insight. Because those are the biggest market moving macroeconomic events. But then it's about also what's going on with the fundamentals of the businesses that we can invest in. So it's taking that perspective. Because markets isn't the economy, right? We invest, if you want to think about it in these terms, we invest in the S&P 500, not GDP, right? S&P versus GDP. They can be very different. Now we look at the fundamentals, also taking stock of valuations. So that's the price that you're paying for those fundamentals. But then we also want to talk about some of the bigger topics as well. You know, this is a midterm election year. We do have a Fed who it looks like they might pivot from being on pause.

15:46They've been on pause with the rates ever since December 2025. Now they're likely to reverse course to offer us a hike. It's not guaranteed that they're going to hike, but that is what the market is pricing in. So what we do is we look at history. What has happened in that type of setup before? It does lead us to think that from kind of a portfolio positioning perspective, and that it pays to be a little cautious, really take stock of your stocks that you have. Where are you invested? Where's the concentration risk? Is it in an individual name? Is it in an individual sector theme? And maybe think about diversifying that a little bit. To be a bit more intentional with the portfolio. A lot of people maybe are more accidental with how their portfolios come together. We want to be very intentional about it. This is some of the research that we provide along with the free education. So navigating the markets and inflation trends. Navigating the markets is coming up on Thursday, September 10th.

16:47The inflation trends webinar is Friday, September 11th. As you get into the weekend, check out our social media too. We have a great insights tab at annexwealth.com. Dr. Brian Jacobson, you put your blog up there sometimes. Yeah, that's one that I really enjoy doing trying to every week. We call it macro and market museums because I'm a sucker for that type of parallelism and alliteration. Where it's really looking at what's going on, what did we learn about growth, inflation, policy, and then looking ahead in terms of what's on the calendar and what are we really looking for in the markets? Fresh content for you. As always, anytime you want to with the insights tab at annexwealth.com. Financial planning at every level. Nine total locations. Whitefish Bay, Brookfield, Lake Country, MacWan. Downtown in the fister Madison. And you're invited to our annexwealth management headquarters in Brookfield for a single in retirement. This workshop is going to help identify sources and best practices around managing your health care, housing, finances, and creating a support network.

17:49Again, that's this Wednesday, September 9th from 6 to 7 on our annexwealth management headquarters. Glad you're here with us this morning. Time for news. Let's go to the WTMJ Breaking News Center. We're going to bring an investing insight from a fee-only fiduciary. You're listening to Muddy Talk, the annexwealth management show on WTMJ. This is Muddy Talk, the annexwealth management show, and our America 250 series continues. Looking at the history of the American economy, Chief Economic Strategist, Dr. Brian Jacobson, has been part of this series. And this is our series finale. Brian, a lot of people actually pay for this class as a professor. Maybe some people don't know that. Oh, yes, I am very blessed to have started in academia, actually teaching at Wisconsin-Lutherham College, and now I teach part-time at Marquette University. Now, I don't teach economic history there. I teach a financial econometrics class. You can think of that as being statistics and data analysis as it applies to finance and investing.

18:50I've certainly learned a lot. I feel like I should have paid you for this course. Lesson 11 of 11 were kind of caught up to date here. Zero rates, a pandemic, the AI economy. It's 2010 till now. Last time we looked at the lost decade, the tech bubble that burst, and then a global financial crisis. Now, the recovery, the pandemic, and the AI economy. So coming out of the global financial crisis, the Federal Reserve set its target rate at near zero. So what did that do to the economy in the markets? Well, it's interesting the distortions that that may have caused. If we think about what the Federal Reserve did in order to try to re-kick start the economy coming out of the global financial crisis, putting interest rates to zero, people referred to it as Zerp, the zero interest rate policy. They also expanded their balance sheet. And Chair Warsh, who is the Chair today, he was on the board prior to the financial crisis, and he was critical of how low they were pushing interest rates and how much they were expanding their balance sheet.

19:51So kind of interesting to see how we've almost come full circle here. If we think about what happened with interest rates near zero, really what it did was with your savings accounts that you had, do you remember the days when you would look at, oh, it's the interest rate if you go to the bank, and it was like zero point something. Yeah, and they would have the little digital signs. That's right, exactly. And that was all in intention of trying to get people to take on more risk, pushing people out into riskier stocks and bonds. That was a stated purpose behind that zero interest rate policy. So it made money very cheap, abundant, and also encouraged people to take on more risk. So it was not without its critics, but I think that when we look back at it, it's like, okay, it did serve its purpose. Now the debate is, did they almost overstay their welcome with some of that policy? So what was it like for an economist to watch the pandemic? It was sort of a slow build.

20:51I remember March of 2020, we didn't really know what was going on, and then wow, everything changed. So it was just constant fluctuation. Yeah, so when we go from 2010, fast forward to the pandemic, the Fed at that point, they had realized that, okay, the economy's getting back to health. It had a pretty good economy, 2017 to 2019, and then bam, along comes the pandemic, slamming on the breaks of the overall economy. And I think really what it forced people to do was to look at history. What has happened before, maybe in the United States, because we have had pandemics before, and what has happened in other countries, during other episodes like it. It's just, this was on a much bigger scale. So you almost had to look at some of these more historical examples that were more isolated and try to extrapolate out. All right, what does that mean if you scale that up by a factor of 10? If you think about the government response to the pandemic, shutting down businesses, but you had all those stimulus checks coming from the federal government,

21:51plus the Federal Reserve really loose monetary policy. So you had this kind of flood of money coming into the economy, and yet the real economy in terms of manufacturing that was really shut down. That was almost a recipe for inflation. We were able to get a very rapid bounce back. So, you know, we saw the stock market, it crashed, like 34% over the course of like a month. It was the fastest decline on record. But then we also saw one of the most rapid increases when it's like, all right, you got the stimulus checks. People are just pivoting from going out to the bar, drinking at home instead. Instead of, you know, going out and buying stuff, they're staying home and doing it, things are being delivered. So it was this massive reorientation of the economy, and it's actually pretty incredible when you look at the data series about economic growth, where you can see it just divot. It just drops, and then just the rapid rebound that happened. If you take a look at that time period, did somebody benefit from that?

22:51I mean, I'm sure there were some companies that did as far as delivery, you mentioned delivery services, or a lot of at-home stuff. You know, when you think back to that time period, are there companies that really came out ahead? Well, if you remember back the day, that's where we also developed the term meme stock. Everybody was at home kind of trading their accounts. It's this gamification of investing that took place. So there were companies like GameStop, where all of a sudden it's like, you know, their stock went to the moon. You had AMC, you also had Bitcoin, that was really taking off. But in terms of the companies providing the technology, the use of Zoom, that company did quite well. Yeah, we know, I had to remember our passwords. That's right, quickly. And had to remember how to turn your camera on. Or you're on mute, right? Or remember that it is on. That's right. The interesting thing is that forced adaptation, where people suddenly needed to adopt this new technology and adapt to it. Some research has suggested that forced like upgrade that people did to technology to just kind of survive during that period of time has led to stronger productivity growth today.

23:59So even though it's years afterwards, people learned how to do drive up delivery. They learned how to, if you were a restaurateur, in order to survive, you had to learn how to do carry out and have some sort of online presence. So that forced adaptation in a way, some businesses learned how to not just survive, but thrive as a result of it. And in November of 2022, perhaps that accelerated the launch of chat GPT and a lot of the AI models. Yeah, and that was the original, large language model. So today we're talking about like artificial intelligence all the time. That actually came out all the way back in November 2022. Very rapid adoption. And I still remember as far as using that technology when it first came out, all the hallucinations that it would make, you know, kind of make stuff up. And they were calling it AI Slop. It's still an issue, but it does seem as though it really did set off this arms race in terms of who could build these bigger models, more effective. And then that's had spill over effects into well. Now we need data centers.

25:01If you need data centers, you need construction jobs. If you are going to also have a data center, you need to have all the infrastructure to support it. So all these kind of snowballing effects from it. Do you think it would have been a little bit of a slower launch as far as data centers and the growth of AI had the pandemic not happened? You know, that is an interesting thought because probably the technological adoption as far as the number of people who were comfortable using technology. The comfort, yeah. You probably would have had fewer people. It would have been maybe not as ubiquitous in terms of as wide ranging as in terms of the number of people who were using it. It probably would have still taken off. But yeah, I think you're right. It would have been a little bit slower if you didn't have that forced like everybody had already upgraded their computers to use this and became comfortable with the technology. It became comfortable with communicating, chatting online, using your Zoom's teams, Google meets and all that. And it's like, I'll just chat with an AI chat pot. That's right. I certainly had to accelerate my learning. Yeah. 250 years of the American economy. But what can we expect in the next decade?

26:01That's coming up here in a few minutes. Thank you for having us. Now today, this is Money Talk, the Annex Wealth Management Show. Whether you're listening on the radio, App Smart Speaker or the podcast, you can listen to every episode of Money Talk. Wherever you get your podcasts, Apple Music, Spotify, Amazon. And we give you the video version of our We Can Review with the Axiom. That is our newsletter. It comes to your email on Sunday mornings with things we are watching for the upcoming week. And reminders about things that you can prepare for. Just search Annex Axiom. Other podcasts as well with the new episodes like the wealthiest ideas, strategies and decisions of the wealthy in America. The SWAT Podcast every Monday morning, even on Labor Day Monday, this coming Monday. Strengths, weaknesses, opportunities and threats of the current market with a new episode every Monday morning. Great way to keep up with the AI stock trends. And the Women and Wealth Podcast. That's our new one. Very proud of that one featuring special guests to empower women through genuine conversations. A lot of local and influential guests on that show over the past few months.

27:04A lot of them you might know. That's the Women and Wealth Podcast. And of course you can check out the Women and Wealth page at annexwealth.com. Money talk is straight talk from a local fee only for do sharing. It's time to know the difference. This is Money Talk, the Annex Wealth Management Show on WTMJ. This is Money Talk, the Annex Wealth Management Show. Thank you for having us on. Our America 250 series continues. We're up to present day now. 250 years on the American economy. Still doing what it had always done. Reinventing itself. We were just talking about AI and the growth of technology. And what do you think is ahead? We're in the AI era right now. We talked about the bubbles. What are we looking forward to in the future? Well, this is where I think it's really important to look back at the 250 years. If you think about the, we went through a civil war. We went through two world wars. We've had numerous banking crises throughout history. We've had the Great Depression. We've had the tech bubble in burst. We've had all of these challenges.

28:05And yet we've survived. And in fact, thrived. I think that really the key lesson is just this. Think about the importance of institutions. And how it is that we have individuals that are incentivized to make things better. Right? And make a profit doing it. But really, you can't make a profit on it unless you're offering something of value. So the importance of institutions, how they have held up, even though they've been challenged throughout the US history. The importance of incentives and entrepreneurs. And independence, right? The individuals are the ones who are making these decisions and improvements. So I think that it's actually an optimistic about the outlook. We've had an average economic growth rate over the last 250 years of about 3.5%. Sometimes it's been a lot higher. Sometimes it's been a lot lower. Just thanks to the institutions, incentives, and individuals. I'm optimistic about what the outlook is for the next 250. Especially with AI. And we'll see.

29:05I mean, there is that AI fatigue term that I keep hearing because people are making graphics all the time. My kids are in sports. And so people are making flyers all the time with AI. And they all look the same. But hey, we get it. We're all experts now with graphics. But Dr. Brian Jacobson, an expert you could talk with here at AnnexWolf Management. Thank you for doing the America 250 series. I know I had fun doing it. I did too. Thank you so much for this. You can see all of our America 250 series episodes on the AnnexWolf Management YouTube channel. LinkedIn, Facebook, Instagram, and of course, AnnexWolf.com, our Women in Wealth page, our blogs, our events page, single in retirement. Another reminder that's coming up this Wednesday. That workshop can help identify sources and best practices around managing your health care, housing, finances, and creating a support network. So reserve your spot for you and I guess that's this Wednesday. Click events at annexwolf.com. Couple of webinars coming up next week too. Navigating the markets insights from the Annex Investment Committee on today's market and economy.

30:06And also inflation trends. Inflation being talked about quite a bit these days, bragging down the recent inflation numbers and how they might affect you and your questions live. And what might happen for the rest of the year that's on Friday? We'll also cover that Fed decision too on September 16th. Lots coming up yet this month. It's September. Click events at annexwolf.com. Financial planning at every level. Annex Ignite. Annex Comprehensive Wealth. Annex Private Client. This is Money Talk, the Annex Wealth Management Show on WTMJ. Know the difference with Annex Wealth Management. More familiarity with health savings accounts is helping more employees build larger balances and make greater use of these tax advantage health care savings tools. So average accounts, the balances reached a record high. It was a recent article. Most account holders will contribute well below annual maximum limits. So that's leaving some people underprepared for future medical expenses.

31:10You never know what can happen. This data actually comes from the Employee Benefits Research Institute. And it might lead us to a gradual shift towards long-term planning as more participants invest a portion of their HSA assets rather than keeping all the funds in cash. So what do we do? What do we plan for? Manager of Financial Planning at Annex Wealth Management, Tom Perkoltz back on the show Hey Tom. Hey, thanks for having me. What factors do you think are driving the steady increase, I guess, in average HSA balances over the past few years? Yeah, there's a couple of reasons. I think more and more people are signing up for high deductible health care plans in general, which is a prerequisite for contributing to an HSA. In fact, the Kaiser Family Foundation, they just did an annual survey. And they found that in 2025, nearly one-third of covered workers were enrolling in an HDHP's. There's a variety of reasons for that too. In general, I think one is that employees are looking at, during an open enrollment period, they're looking at their health care options and saying,

32:11oh, this high deductible plan, I could save maybe $7,500 per paycheck and they opt for that plan, which allows them to make HSA contributions. All the costs seem to be going up and that was going to be one of my next questions. Why do so few account holders contribute the maximum allowable amount? You've got these significant tax advantages that HSAs provide. Is this just a lack of education or maybe just not the funds? I would start with the funds. I think most Americans simply can't afford it. There's another recent survey by the NFP and they found that nearly half of respondents said they are deprioritizing retirement savings. And they cite things like just day-to-day spending challenges. Things are getting so much more expensive in this country. I think people look at ways to cut costs and HSA contributions are on the chopping block for some people. The second reason is just maybe a misunderstanding of really how to leverage an HSA in general. So it's not just the savings part of it. There's also tax benefits with that as well. So what do you think employers can do? How can they better help the employees understand what the HSAs can do for them?

33:15Yeah, it's tricky because generally employers or HR staffs are limited on what they can tell you. Like they might have that annual meeting where they talk about open enrollment and benefits and things. And they can talk about the contribution limits and the mechanics and what options are available. But they have to stop sort of giving you advice because they're not licensed financial advisors. I got no one's really going to courtesy call you or inform you on what you should be doing in your situation unless you're obviously using an advisor or something like that. You got a recorded video for some of these folks. Right? It's too much HR folks. Hey, here's Tom. So what do you think is preventing more account holders from investing a portion of their balances? One thing I've seen is that many HSAs are set up through a specific custodian that's chosen by the employer. And that type of HSA may have a default cash structure instead of more of like an investment focused account. Some HSAs even have a minimum threshold where you need to have a thousand dollars or two thousand before you can even invest it at all.

34:19So that's a couple of things. And then another is that generally individuals might not be aware that you can actually set up an HSA outside of your employer's recommended account. You'll see I didn't know that. Right. So you could go and kind of shop the market and find a low cost HSA that has a menu of investment options for you. So you can kind of leverage your HSA as a long term savings tool instead of a short term cash account. And if you have a large HSA balance, how does that affect the retirement readiness and maybe some healthcare planning? Imagine you are a retiree about to retire and you have a six figure HSA. It kind of changes the game for you in many ways. It gives you a lot of confidence going into retirement that you can absorb and take on some healthcare costs. That could be a whole year earlier that you retire. Right. Yeah. And to be clear, there's many retirement plans that are totally fine and they don't have an HSA at all or it's not very large. What are some of the things that you see on the financial planning team from some clients decide whether an HSA maybe is right for them?

35:19How much to contribute and people with large balances? What to do with that money? How to spend it? You see all of it? Yeah, we see all of it. And the interesting thing I see is I look at someone's tax return and there's actually a tax form that tells you what you contributed to your HSA and then what you took out of your HSA. So a common thing I see is one people are not maximizing their HSA, which is fine. There's a variety of reasons why you wouldn't. But then I see a lot of people spending everything that they put in, which again, it may make sense for them, but it also may make sense to not spend your HSA and invest the proceeds and use it. And leverage it as a long term savings vehicle rather than a short term cash debit card type of thing. Being able to break down those numbers, that's something that we can help you with. I'll show you some guidance at Annex wealth management. He is the manager of financial planning here at Annex. Tom Birkholz, thanks for being on the show again. Thank you. No, the difference with Annex wealth management. Click the get started button. That's the first step at AnnexWelf.com. Advice and opinions expressed during money talk. The Annex wealth management show are solely that of the hosts or guests of Annex wealth management and not WTMJ or good karma sports.