| A | B | C | E | |
|---|---|---|---|---|
1 | HSA Wealth Creation Calculator | |||
2 | ||||
3 | This calculator is designed to help high net worth investors determine if they should use an HSA as a "stealth IRA." | |||
4 | Investors can enter assumptions about returns, time horizon, and types of withdrawals they will make. | |||
5 | ||||
6 | Calculator Guide | |||
7 | Cells with blue text in bold and italics are inputs. You can edit these manually. | |||
8 | Cells with white background and black text are calculations. Typically, these should not be edited. | |||
9 | ||||
10 | # | Field Description | Value | Notes |
11 | 1 | Amount Contributed To HSA | $7,750 | |
12 | 2 | Your Current Marginal Federal + State Tax Rate | 30.0% | This should NOT be your blended tax rate, but your marginal tax rate (the tax you'll pay on every additional dollar of income) |
13 | 3 | Expected Annual Investment Return (Tax Advantaged Accounts) | 8.0% | You'll need to make an assumption about the returns your investments will realize. 401(k) investments will grow tax free; this should be the expected return for a tax advantaged account. |
14 | 4 | Expected Dividend Yield | 2.0% | |
15 | 5 | Expected Tax Rate On Qualified Dividends | 23.8% | |
16 | 6 | Annual Return On Taxable Account | 7.5% | |
17 | 7 | Years Until Retirement | 25 | |
18 | 8 | Your Expected Marginal Federal + State Tax Rate In Retirement | 25.0% | Non-qualified withdrawals from an HSA may be taxed as Ordinary Income |
19 | 9 | Your Expected Capital Gains Tax Rate In Retirement | 20.0% | If you leave your money in a taxable account, gains are taxed as capital gains (and not ordinary income) |
20 | 10 | Penalty Rate For Early, Non-Qualified Withdrawals | 20.0% | |
21 | 11 | Percentage Of Future Account Value Expected To Be Withdrawn For Non-Qualified Expenses Before Age 65 | 0.0% | |
22 | 12 | Percentage Of Future Account Value Expected To Be Withdrawn For Non-Qualified Expenses After Age 65 | 100.0% | |
23 | If you don't invest in an HSA: | |||
24 | 13 | Pre-Tax Growth Of Contribution In Taxable Account | $47,527 | |
25 | 14 | Capital Gains Taxes Owed | $7,955 | |
26 | 15 | After-Tax Taxable Account Value | $39,571 | |
27 | If you invest in an HSA, and use money exclusively for qualified health expenses: | |||
28 | 16 | Growth Of Contribution In Tax-Free Account | $53,076 | We assume you'll invest this money (that you otherwise would have had to pay in taxes) into a taxable account. At the end of your time horizon entered above, it will grow to this amount. |
29 | 17 | Tax Savings Today | $2,325 | |
30 | 18 | Growth Of Tax Savings In Taxable Account | $14,258 | |
31 | 19 | Capital Gains Taxes Owed In Retirement | $2,387 | |
32 | 20 | Total Future Tax Free Value, Prior To Taxes And Penalties | $64,947 | |
33 | This next section calculates taxes and penalties owed on withdrawals for non-qualified health expenses (if you entered any expected values above) | |||
34 | 21 | Non-Qualified Withdrawals Before Age 65 | $0 | |
35 | 22 | Non-Qualified Withdrawals After Age 65 | $53,076 | |
36 | 23 | Taxes Owed For Non-Qualified Withdrawals Before Age 65 | $0 | |
37 | 24 | Penalty Owed For Non-Qualified Withdrawals Before Age 65 | $0 | |
38 | 25 | Taxes Owed For Non-Qualified Withdrawals After Age 65 | $13,269 | |
39 | 26 | Penalty Owed For Non-Qualified Withdrawals After Age 65 | $0 | |
40 | 27 | Total Future Value After Taxes and Penalties | $51,678 | |
41 | 28 | Wealth Created By HSA This Year | $12,107 | |