Cleaning out my folders as I prepared to leave my federal job last year, I came upon this legal size paper:

Yeah, you have to squint.  I have tiny handwriting. 

Anyway, these numbers look to be from 2005 or 2006.  The Bush II administration!   

The meaning of some of my decades ago scribblings is lost on me now, but on the top I am clearly projecting out federal GS scale salaries and savings for the next 8 years or so.¹ 

Most interestingly, in the bottom left are some of my past and projected government Thrift Savings Plan (TSP) contributions.  From this “historical document” it’s interesting to see that I did not “max out” my retirement contributions until 2007.  It appears I was at least contributing enough to get the full 5% agency match (smart!) but I guess I felt like maybe we didn’t have the budget to do more until a few years later.  

Nevertheless, my final TSP balance at retirement was more than I would have imagined back then. Nor is my experience unique for feds who pushed money into the TSP throughout their career. Nearly 3% of all participants are TSP millionaires. ²

I don’t recall thinking much about “what is my TSP going to be worth when I retire in the 2030s?”  It was too far off.  I don’t even recall monitoring my balances very closely although I know I looked at the year end account update mailed from TSP.

My TSP was just there and growing and I figured it’d be good to have it someday in the future.  It wasn’t until 2020, approaching 20 years of federal service and suddenly the reality of retirement starting to appear, that I remember thinking “wow, that TSP balance is turning into real money”. (I’m building a wealth snowball!)

I started paying more attention.

Little did I know, back in the early 2000s, that regularly contributing as much as I could, staying heavily in the TSP stock funds, especially the “C” fund, and benefiting from a long running bull market would gradually, then suddenly, push the balance so much higher.

Lessons learned. Like probably everyone else, I look back and think, ” Wow, if only I could have contributed even more 20-25 years ago, think how much higher my TSP could be now!” But just contributing something in early years, when times may be leaner, is an achievement. Looking back, I think we were doing as much as we could. That’s the most important thing.³

Which brings us to Lesson Two: time in market is better than timing the market. It sure is more realistic. Those long ago contributed dollars compound mightily through the years and can dwarf later contributions at the end of your career.

In other words, the smaller annual sums (I only put in $570 in 2001!) I contributed long ago, compounded over 25 years, are mightier today than the entire $32,500 employees over 50 like me could have contributed in 2025. In fact, once a TSP overall balance approaches $1M and beyond, a really good or bad day in the market (depending on your fund allocations) can change the TSP balance more than an entire years worth of payroll contributions.

Lesson Three, as I noted in my earlier FIRE post, is to reduce your expenses so that your extra dollars are first going to maxing out your retirement contributions before other things. The savings you enjoy from buying a used car or smaller home can be invested and then compound over the years.

The financial projections I did on that old piece of legal sized paper weren’t necessarily accurate. But I would say accuracy in this case doesn’t matter as much. Just that I was doing them at all (even if I was doing them while sitting against the wall in a staff meeting), and thinking about the still far off future was what mattered. I’d like to thank my 30 something year old self!

_________________________________________________________________________________________________

1. It looks like I plugged in a 3.5% annual inflation rate for my GS scale salary predictions.  The Great Recession of 2008-09 and a subsequent few years of very low (or no) inflation cut into my projection. Instead of $155K, a GS-15 step 6 salary ended up at just over $149K.  Close enough. ︎
2. There are probably over 200K TSP millionaires and that’s doesn’t count already retired folks who had over $1M in their TSP account but subsequently rolled out all or most of it to outside investment accounts. ︎
3. My “lessons learned” are not novel. It is pretty standard financial advice from many sources. Anyone who can avoid the temptations of get rich quick schemes or trying to time the market can do this and build wealth.
   ︎

VERA is pretty nifty.  If your agency offers it, employees over the age of 50 with at least 20 years of service can retire immediately with full benefits.  Full benefits encompass several things, but the biggest are: 1) an unreduced federal pension with annual cost of living increases (COLA) forever and 2) the ability to stay on the federal employee health plan (FEHB) forever.² It’s a great deal. 

Generally, to qualify for those retirement benefits, regular FERS employees like me have to reach 30 years of service and their MRA (minimum retirement age) which is 57 years old for anyone born after 1970 like me.  Under that formula, I would have had to wait until early 2030 to qualify. 

I liked my job quite a bit, but nevertheless, a few years ago I started to know exactly how many years I had before I hit full eligibility.  This didn’t mean I’d be out the door the very next day, but it’s always nice to know that you could press the “eject” button at any time after that point.  That’s why hitting full retirement eligibility is fun. And freeing.  One of my FBI colleagues referred to it as getting “KMA” status. The K stands for “KissAs it turned out, my friend KMA’d in 2025 also.  Of note, FBI and other federal law enforcement employees have a sweet deal where they reach their full retirement eligibility earlier.  Of course, their pension is less with fewer years served.”. The M is for “My”.   

So. In February, my national security-related agency offered VERA to employees over 50 with at least 20 years of service.  You had to leave by the end of 2025.  This was exciting news — I wouldn’t have to wait until 2030 to retire.  I could retire in 2025, 5 years early.  After much number crunching and pondering with Mrs. Anysecondnow, I applied for VERA and got approved.  (I was not nervous about approval. I think just about everybody was getting approved in 2025.)    

As my departure approached, I spoke to several colleagues that were also VERA eligible who told me they would love to take the offer and leave, but could not because of financial pressures.  Those pressures were either house payments or kids in college (or kids soon to start college).  Usually both.  

We did not have those financial pressures.  Or, more precisely, those pressures were far less in our case.  The reason they were less in our case was a result of family financial habits that matched up well with FIRE principles.  To be candid, we made some of these decisions before I’d ever heard of FIRE.  But when I discovered the movement it made sense to me.  

FIRE this, FIRE that, what is it?  FIRE stands for Financial Independence Retire Early.   I’m going to just quote a streamlined version of the Wikipedia entry here: 

The Financial Independence, Retire Early (FIRE) movement is a personal finance phenomenon characterized by high savings rates and aggressive investment, with the goal of accumulating sufficient assets to cover living expenses without traditional employment. The movement gained traction among millennials in the 2010s, spreading through blogs, podcasts, and online communities.

Participants in the FIRE movement typically seek to reduce expenses and maximize savings, building investment portfolios intended to generate passive income. A common framework advocated within the community involves spending less than one earns, investing the surplus, and minimizing debt. The most frequently cited savings target is based on the 4% rule, introduced by financial planner William Bengen in 1994, which suggests that a retirement portfolio equal to 25 times annual expenses can sustain long-term withdrawals.

FIRE has been a thing since at least 2010 and, yes, there are a number of promoters on the Internet.  Mr. Money Mustache might be the most well-known. He’s almost certainly the most entertaining.   But I’ve also read or followed Go Curry Cracker and Financial Samurai (a fellow W&M grad) among others.  Or you could lose a day of your life in this Reddit thread.

Just like Harry Potter and Hogwarts houses, you can find yourself in certain FIRE categories:

Ditching the 9-5 M-F workforce while in their 30s or 40s and forthwith existing on savings and side hustles (often their blogs) seems to be the shining goal of many FIRE enthusiasts.  The FIRE movement did not really exist while I was in my 30s and retiring that early wasn’t in the cards for me and my family.  I didn’t even start working at my first, and only, real job – government attorney – until I was 29. 

But we were following the principles the whole time.  Spend less than you earn and sock away as much money as you can.  The less you spend, the more you save, and the earlier you can retire. Or, more precisely, do what you want to do without feeling beholden to a job. Read some Mr. Money Mustache and it’s hard to resist the gospel of slashing your spending and having fun doing it. Kill Your Grocery Bill or Get Rich With Bikes  are just two of his many diatribes against excess spending. MMM can be extreme, but he’s not wrong.  

Food, for example. I can make a tasty lentil soup that provides 8 persons-worth of meals.  It’s easy to make and costs maybe $2-3 in ingredients.  And it’s spectacularly healthy, especially compared to a typical restaurant meal. Do that sort of thing in your daily financial life, over and over throughout the years, and you will save thousands of dollars that can go into savings and start compounding interest. 

The First Big Thing.  My family’s biggest money saver is the wee townhouse we bought years ago and never moved out of. It’s 3 floors, not quite 1200 square feet.  No garage, unfortunately, but it has a great (small) roof deck. Twelve hundred square feet is perhaps 55% of the average American home size.  

We almost moved around 2010-11 to get more room and I’m glad we didn’t.  After a few refinances of that purchase, we have a low interest rate on a decreasing mortgage. Home equity loan? Never. ³ 

One more thing about smaller houses.  The lower mortgage is only the start of your savings.  Nearly every other house related thing is also cheaper.  Insurance, property tax, maintenance, utilities, especially heating and cooling.  Cleaning.  The savings are immediate and cumulative.  By the way, this principle operates the same way for German cars v. most other kind of cars.⁴     

The Second Big Thing.  College costs – current or impending – was the other huge differentiator between me and many of my colleagues.  Their kids were frequently going to or planning to go to expensive colleges, often out of state and/or private. Honestly, even a relatively cheaper, in-state, college can be shockingly expensive when you add up the costs over four years.  

In contrast, our daughter attended local community college for two years to knock out her general education classes, figure out what she wanted to major in, and gain confidence for a four year college.  Missions accomplished. Two and a half years later when she started at a four year school, she had the maturity and confidence to handle college classes and schedules with ease.

In Virginia, as in most other states, if you do well for your two years of community college you qualify for automatic admission to any public four year Virginia school. It’s a sweet deal. Our daughter also still lives at homeIncidentally, living at home to attend a local college is common in the rest of the world does. Nor do families or students go into massive debt to go to college in other parts of the world. In America, that’s just accepted. It’s also accepted that most colleges are luxurious, with fine student living, extensive and delicious dining options, and, often, extraordinary sports facilities and sports coaches earning many multiples more than the highest paid faculty member. This is unheard of outside of the U.S. Make no mistake, I think the U.S. is a remarkable and unique country. I’m a proud American. But I feel that some of our institutions – colleges and healthcare, for example – have gone seriously awry in the last half century. It’s not normal but we often don't realize it. (which saves us a ton more money) and will graduate with the name of her 4 year university on her diploma.⁵ 

In sum, our college costs are a fraction of what many of my colleagues are paying for their child’s college life.   

Interestingly, when I tell other parents about our daughter’s 2+2 college arc and the resultant modest costs, nearly every one of them says what a good deal that is and everybody should do it. Honestly, I’m not sure they all mean it. Or perhaps it sounds nice in concept for some people, but their are own kids sure aren’t doing it.  And that’s fine. But some of those parents are truly envious.

One colleague in particular would lament to me repeatedly about how he wanted his HS senior daughter to do what our daughter was doing.  But his daughter, for unknown reasons, had set her sights on a private CA college and Mom decided she wanted it for her daughter. This issue became the source of much discord in their home. ⁶

Look, I get it.  If I had a kid who could get into Stanford or Princeton, I would love to send them there.  Then I’d sigh contentedly as I put that Ivy League school sticker in the corner of my car windshield and try to casually drop “yeah, my kid’s at ____ fancy school” into as many conversations as I could.  Can’t put a price on that, can you?  

Well, you sort of can. Maybe not a specific price, but part of that price might mean you can’t take a rare VERA offer because you can’t afford your child’s college costs and your mortgage without your full time salary. 

Power of Spending Less. With our savings from cooking at home often, buying and selling stuff on Facebook Marketplace, not buying new cars, riding my bike a lot instead of driving, using accumulated award miles for flights and hotels, and 101 other things  here and there I hasten to add that while we are frugal, we have plenty of fun. Date night dinner out every Friday. Fun vacations. Heck, I bought a (used) Audi at one point. Some FIRE advocates would not approve. , we max’d out our retirement accounts for about two decades.  After fully funding those, we shoved more savings into taxable mutual funds which we’ll able to access without IRA age restrictions.

Our financial position is not solely because we saved a lot.  Like everyone else invested in the market, we’ve also benefited from a mostly uninterrupted bull market run since the 2009 Great Recession.  But you’ve got to have the money in the market to benefit from that bull market and the magical compound interest.⁷  

Our spending patterns are not superior to other people. We’re not full on FIRE, for sure. Every family has to balance and value many factors. Clearly, my colleagues, while still working every day at the office, get value from their decisions. They are thrilled to have their kids in prestigious schools and I’m sure they enjoy their bigger, nicer houses.  Just because I value those things less and can choose to take a VERA early retirement, doesn’t mean they made the wrong decision.  

Yet, while it’s not a competition, I have to suspect I might be a little happier than some of them these days! Not going to work every day and exploring new opportunities is pretty fun.

I will tell you what was the most fun though: having low enough expenses and sufficient built up savings — relative financial freedom, if you will — that we could take the VERA offer.

1. VERA, unlike the 2025 Deferred Resignation Program/Fork in the Road/Elon Musk’s e-mail/whatever you call it, is an existing statutory authority.  (Call me a traditionalist, but whenever possible I like my major life transitions involving hundreds of thousands of dollars for the rest of my life to be based on a statute, not an e-mail.) Under the VERA statute, agencies can designate, with reasonable justification, categories of employees as eligible for VERA. OPM must approve the proposal.  ︎
2. The COLA (cost of living adjustment) doesn’t kick in until age 62 for regular FERS employees like me. So if you retire before 62, you have to wait for the COLA. That hurts, but it certainly isn’t a deal-breaker. ︎
3. We only have one kid, so I will acknowledge that helps in terms of all of us fitting into our house. But we were close to adopting another child and were prepared to squeeze in one more without moving.  Sadly, the adoption fell through a few days after the birth.    ︎
4. I know what of what I speak. I got a nice deal on a used 2014 Audi S4 with a manual transmission. I probably won’t ever own a better engineered car in my life.  But insurance, repairs, taxes, everything related to this car, cost me.  I sold it last year and used the proceeds to buy outright a used Mazda 3 Turbo which is also fun to drive (but no manual!) and cheaper to own.) ︎
5. She might even end up having leftover money in her 529.  Which can be transferred to me or my wife for education costs or, get this, converted to a Roth IRA for our daughter. That’s fantastic.  I’ll probably do that.  ︎
6. My colleague eventually left federal service and took a less enjoyable but more lucrative government contractor job to pay for the college costs.  ︎
7. We’re lucky, but I don’t think we’re rich. I mean, I was a government lawyer and Mrs. Anysecondnow worked various part time jobs. We’re not buying vacation homes or investing in hedge funds over here. But our (FIRE) financial habits keep our expenses low, we have savings, and that reduces financial pressure. ︎

In other words, do something with your money now, when you’re relatively young! Enjoy donating money to charity, taking those vacations, spending time on what matters, and not waiting for an uncertain future when you hopefully someday “have enough money”.  

For example, the Die With Zero website says that author Bill Perkins views his career as:

“an engine for personal growth and spends his time exploring the world, savoring his relationships, and taking in all that life has to offer.”

That maxim sounds pretty great — I can get behind it. Although I have to pause here and note that Perkins also describes himself as “one of the world’s most successful hedge fund managers and entrepreneurs.” I’d wager that exploring the world and “taking in all that life has to offer” comes a lot easier when you have a big ol’ pot of investment fund profits.

Nevertheless, many readers of this blog may have accumulated, if not a “successful hedge fund manager” level of cash, a not-insignificant pot of savings. Probably more than the average American, I would venture to say. So the Die With Zero admonition is probably still a realistic goal for many of us even if we weren’t Wall Street wizards.

Moreover, I myself am sometimes guilty of enjoying and tracking the accumulation of money instead of considering and planning what I can do with that money. I even feel some anxiety about withdrawing instead of accumulating in the very near future. Never underestimate how having a big pot of money can feel like a warm blanket of security.

Use That Money. But the Die With Zero approach asks, gently or perhaps not so gently: What is the point of having this money if you don’t use it for positive life experiences? To create great memories. To help people out now instead of later. Maybe even your own children.

To take an example of the latter, which lives part-time in my house right now: will my daughter appreciate financial assistance more in her youthful 20s and 30s when she is perhaps trying to buy a starter home and establish herself? Or will she prefer it later, maybe in her 50s and 60s, when she is already likely established and financially secure.On the other hand, one could make a case that holding off giving money now means more time for my money to grow in the future -- instead of $5K now my daughter could get $50K 25 years later. But I still say she would probably choose, and it would be better for her, to take less money now when her need is greater over the possibility of much more money later when it might not be as life changing. YMMV.?

This mindset makes even more sense as you consider that you will, sooner or later, arrive at a point in life (hopefully not too soon!) where physical limitations limit your ability to go out and make those memories. In other words, what’s the point of dying with lots of money that you worked for and saved when you were younger, but then never used?

I can definitely get on board with the Die With Zero mentality. I like doing good now. And I love good memories. I did lots of fun stuff in college even when I sometimes had a bank account balance below three figures. Road trips.  A life-changing Arabic Study Abroad program in the Middle East.  Staying out late with friends and girlfriends. I often enjoy reminiscing about those times:

Eventually all we have is memories.

Okay, nostalgic interlude over. Let’s rewind back to the present.

The truth is that I think I’ve been living the Die With Zero life to some extent since 2012. There were a series of moments that year where I reflected on the fact that our savings were in good shape, I had a secure government job, an affordable mortgage, and after trying for several years, we probably weren’t having any more kids.  

I realized that I would like to travel more and that we had the means and ability to do so. Later that year, we took 3.5 weeks to travel to Southeast Asia, including a memorable week in Malaysia with my parents who were doing volunteer work there for our church.

A few years later, on kind of a whim, I took a very long Thanksgiving weekend trip to Vietnam and Cambodia, and have been taking fun solo trips ever since. As of now, I’m still doing solo trips as well as trips with family. (Disclaimer: My family is not always as interested in some of my far-off solo destinations. That’s often why they are solo!)

I’ve been donating more to local charities in the last few years than I ever have. I also regularly contribute to the Michael J. Fox Foundation for Parkinson’s Research because I like Michael J. FoxSeeing Back to the Future on opening night might be the most fun I've ever had in a movie theater. and my Dad had Parkinson’s. In fact, taking a utilitarian view, I’d much rather that Fox’s foundation get my money and use it for research to potentially help people now than wait to give it away for decades in the future. (While I’m maybe living with my own Parkinson’s that could have been ameliorated if only I had donated money earlier? Discuss.)

 It’s been said by so many so often, including even by fruit flies, that we could die tomorrow. Obviously, frantically spending all of our money in anticipation of death tomorrow, or next month, is a poor strategy. The Die With Zero approach acknowledges death but changes the focus to gradually spending down our money on memories and good deeds sooner rather than later. I like it.

Or maybe not.  Few feds seem to bother.  Less than five percent change health plans each year.  

I think we’ve only switched once. We had Aetna for many years until Mrs. Anysecondnow got tired of dealing with them.  We switched to Blue Cross Blue Shield (BCBS) Basic about seven years ago.  I couldn’t find hard statistics, but anecdotally BCBS seems to be a very popular option, maybe the most popular.  Mrs. Anysecondnow likes them very much, so that’s what counts. 

To diverge for a moment, Mrs. Anysecondnow takes the lead on healthcare costs in our home. I think a good marriage partnership is good at divvying up tasks.  I do dishes and vacuum.  She cleans the tiles and grout, I clean the tub and toilets.  We both cook a day or two a week.  And we both ignore the dust on the dresser.  

Anyway, healthcare generally falls to her because she is more knowledgeable from some of her prior jobs and because she uses our plan more than I do.I mostly use our plan because of trauma.  Typically some sort of mishap on my bike. Or last month, a dog bite. While on my bike. (Yes, I see a trend here.)

But, my goodness, FEHB premiums and other costs keep going up – an average of 13.5% in 2025 and another 12.3% this year.  Even with the government paying 72% of the premium cost, that is tough to take.   

Seeing those rising prices, maybe all we can do is reminisce about those newlywed married days in our late 20s of hardly ever going to the doctor and only paying a $5 co-pay when we did go.  This table shows what happens to your health care expenses as you age:

But it is open season, so maybe we can do more than pine for earlier days.  Maybe we can find a different plan out there where we can get the coverage we need at a lower price and still keep BCBS’ good customer service?

Which brings us to HDHP + HSA plans. This clunky acronym means “High Deductible Health Plan + Health Savings Account”.  Employers began offering HDHP+HSA plans after 2003 legislation established HSA accounts.  These plans purport to reduce health care costs.  The lure is attractive enough that 50% of employers now offer them, including the federal government. 

The highlight of HDHP+HSAs is the HSA part – the Health Savings Account that you contribute to.  Personal financial folks go nuts over HSAs. “It’s triple tax advantaged!!” they say.  The triple part is this: 1) tax deductions on the money contributed to the HSA  2) the HSA contributions grow tax free and 3) owners pay no taxes on HSA withdrawals when used for broadly defined qualified medical expenses (QMEs).  

Image: BoomerBenefits.com, “How Do High-Deductible Health Plans Work with a Health Savings Account?”

If those present and future tax benefits weren’t enough, part of your already lower premium is paid back to you and automatically dropped into your HSA.  This is the premium pass through, or “PPT”.  For a family plan the 2026 PPT is $1800. 

More? Okay, how about this?  HSAs are flexible enough that you can even pull money out later to reimburse yourself for past medical expenses.  Let’s say you paid out of pocket $500 for an emergency room visit co-pay in 2020 but didn’t use your HSA dollars to pay for it back then.  Ten years later, in 2030, you decide you want some extra tax-free cash.  Pull out that medical receipt (in case you need to document it to the IRS) and then withdraw $500 from your HSA to “reimburse yourself” for that long ago 2025 medical expense.    

Wow, I guess an HSA is pretty amazing.  And I want one.  But you have to have the HDHP insurance plan to get the HSA part.  Although HDHP premiums are generally lower, it’s that HD, the initial high deductible – $3400 for a family plan, in our case – that scares people off.  A family like ours on the CareFirst HDHP would have to pay $3400, full price, for our medical expenses before co-pays and other insurance coverage kicks in.¹ 

I’ve read that HDHP plans are best for folks who don’t think they’ll go to the doctor very much.  In other words, you reckon that you or your family will only need preventive care and maybe another random visit here and there, maybe a few generic prescriptions for the year.  Accordingly, you probably won’t come close to the deductible limit.  You’ll likely save a lot of money compared to a traditional health care plan. 

But what about folks like us who are relatively high users?  As of November, my family has spent $11K of our family out of pocket limit $15K.  I expect that will continue in 2026.  We will definitely max out the deductible and then keep incurring health costs.

How does our situation play out in a HDHP+ HSA environment compared to our current BCBS Basic with no deductible?  Would we save money if we switched?  Or are we better off staying in our current plan?

Let’s run some numbers.²  

But first, two caveats.  One, everybody’s situation is different. These calculations are for my family, nobody else.  Work through your own calculations before making any major health insurance decisions and take the time to do some research.³ 

Two, U.S. health care is complicated.  And that’s an understatementFor many years I have concluded that the most complicated man-made entity in the history of planet Earth is the United States healthcare (or lack of) system. It’s hard to imagine that any one person truly has, or even could have, a firm grasp of all the aspects.  All the various players – patients, insurers, medical providers, scammers, etc. – are trying to game the system to their financial advantage.  For our family, all I can do is make what seem to be the best choices within the context of this inexcusably complex system we’ve ended up with..  Therefore, I am not, and never will be 100% confident that my calculations will reflect the upcoming 2026 reality.  But we do the best we can.  If anybody thinks I’m missing something major, please let me know in the comments.

So, just focusing on the premiums for now, here are my calculations, with numbers lifted from OPM’s FEHB comparison tool: 

Well, well, that is pretty interesting. Just focusing on premiums and deductibles, we’re already saving a bit more than $2K by switching to the HDHP-HSA plan.  At least that’s how I read this.  This assumes that we max out the deductible.  And given our 2025 numbers, we almost definitely will.  (But if this were 1999 when we were younger and healthier, we would not have come close to maxing out the deductible.) 

A promising start so far.  What if I now include in these calculations the additional tax savings from making contributions to my HSA?  In 2026, the IRS sets a $8750 limit for an HDHP family plan like ours.  If you’re 55 or older during the year (which I will be in November, sigh), you can contribute another $1000.  This contribution limit includes the $1800 PPT into the HSA, so deducting that from our $9750 contribution limit, we can contribute $7950 to the HSA in 2026.  That’s a decent chunk of change.  It’s possible we may not hit that maximum.  There is no requirement to do so.  But let’s say we do.  

I’m a little less confident in my numbers here because I don’t have a good sense of our 2026 income with my new retirement status and Mrs. Anysecondnow’s fluctuating employment, but let’s assume a 22% marginal tax rate for MFJ (married filing jointly) status.  This marginal rate applies to taxable income dollars between $50,400 and $105,700 after the standard deduction.  I suspect our family taxable income will end up somewhere in that range for 2026.

So, let’s say we max out our contribution and then take a deduction of $7950 from our 2026 income.  22% of that deduction is $1749.  Worth noting that I had to “pay” $7950 from somewhere to trigger those savings.  But let’s assume I diverted that $7950 from non-deductible contributions I would have made anyway to our taxable Vanguard investments.   

Now let’s add in these projected tax savings to our running totals from the above table. :

Dang, the numbers are looking better and better. With the tax savings from our HSA contributions, we could potentially save $3773.66 using the HDHP+HSA.  Are we really saving nearly $4K by going with an HSA?  Is this too good to be true?  

And, if the savings are that good, why isn’t everyone doing this?  

Finally, is here something I’ve missed or some catastrophe that will pop up during the year that will wipe out these savings?  

As noted earlier, the U.S. health care system is incredibly complexSay what you will about the shortcomings of the European and other government single payer systems (and I think those shortcomings tend to be overblown by Americans) I envy their simplicity, affordability and, most of all, transparency.  This entire blog post about competing plans and savings and deductions would make no sense to a European..  In the end, all you can do is run the numbers as best as you can and proceed.  That’s what we’re doing. 

There are two more major considerations for this analysis.  (To be candid, there are yet more factors that might be considered – customer service, plan geographical coverage, etc. – but I can only cover so much here!) 

The first major consideration is our individual co-pays and medication expenses between the plans.  Specifically, once we reach the deductible limit on an HDHP, what are the co-pays and expenses for coverage that kick in as compared to our current BCBS Basic plan? 

I’m not going to deal with this consideration here because all of our various medical visits and prescriptions are personal and, frankly, probably too boring for this already lengthy post.  Suffice it to say that nearly all of those co-pays – primary care visits, specialty care visits, outpatient surgery, emergency room, etc. – are less under the HDHP.  Sometimes significantly so.⁴  That’s pretty great. 

The second consideration is the overall out of pocket (OOP) maximum for each plan.  Our current BCBS Basic family plan sets it as $15K and the HDHP sets it at $13K.  After that, all of our medical expenses are covered.  (So they say.)

In fact, regarding OOP maximums, an HDHP throws out one more advantage here. While a traditional plan may still charge you additional prescription costs and co-pays once you reach the OOP max, not so an HDHP. According to OPM, once you reach the OOP for an HDHP plan, you will pay no more out of pocket expenses.

At any rate, the family OOP maximum is one of those numbers you prefer not to think much about because if you’re getting close to it, it means your family had a lot of health care expenses that year, maybe even an extended hospital stay.  But it’s nice to know that the HDHP OOP maximum is lower than our current plan.    

Based on all of this, I think there is a strong case to be made for our family switching to a HDHP+ HSA in 2026.  

But even if we do switch, we’re not getting married to the new plan.  If we are disappointed for whatever reason, health care “divorce” in the FEHB is easy.  We can switch back to our old plan — or even try another plan — during open season at this time next year.  If nothing else, we’ll have ended up with a portable HSA that can keep growing tax free and that we can withdraw from anytime.  

Thanks to the OOP maximums, I don’t think either choice is going to break us financially, even if everything falls apart healthwise. 

So, is an HDHP too good to be true?  Check back next year!

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1. Just like a traditional, non-HDHP plan, preventive care is at no cost to you under the HDHP, so don’t skip those basic preventive health care visits and screenings. ︎
2. If you really want to geek out on comparing FEHB plans, you could do worse than these spreadsheets. ︎
3. I like Layered Financial’s blog articles. Tyler Weerden is a federal employee and knows what he is talking about.  Here is his analysis of an HDHP for his personal health situation.  ︎
4. Here are a few comparisons between our current BSBC plan and the HDHP plan:
   Emergency room visit: 425 v. 300
   Outpatient surgery: 250 v. 75
   Specialist visit: $50 v. $35
   Nearly all of the charges are less under the HDHP. The only significant area where a traditional plan charges less is if you are admitted to the hospital. BCBS Basic charges a co-pay of $425, but the HDHP will charge you 20% coinsurance.  Twenty percent of whatever a hospital charges you on a daily basis is probably going to be a lot more than $425. ︎

He ran a series of 30 yearWhy 30 years? Bengan settled on a default scenario of someone retiring at age 65 and needing enough cash to get to 95 years of age. Thirty years. I think this assumption makes sense. Ninety-five is well above the average lifespan of a 65 year old man (who can expect to make it to 83) or woman (three more years to 86). YMMV of course. scenarios of someone retiring with a pot of money invested 60/40% stocks/bonds since 1926 to see what was the highest inflation adjusted withdrawal rate – the SAFEMAX –  they could use and still have money left after 30 years.  Was it 5%? 10%?  3.141592?  

Bengen ran his scenarios and pinned down the worst case scenario – the poor guy who decided to retire in October 1968 into the teeth of a bear market and then the eye watering inflation rates (and disco!) of the 1970s.  In other words, the only way that guy could still have money left after 30 years was to withdraw now more than 4% of his initial pot of money, inflation adjusted each year.   

Four percent was the very lowest withdrawal rate.  The SAFEMAX.  In every other retirement scenario through the decades that Bengen ran, the fictional retiree could have withdrawn at a higher rate. Often significantly higher.  For example, in the best case scenario, after probably losing a ton of money in the Wall Street crash, the fellow who retired in July 1932 could have starting withdrawing at a 16.2% rate!  And thirty years later he would still have money left.  

Of course, withdrawing 16% your first year of retirement is probably a terrible ideaBut everybody's financial situation is different. Maybe you have no heirs and a terminal disease that will kill you in a few years. In that case, you should probably withdraw more than 16%!.  No one knows what markets will do in the next 30 years – although there are plenty of folks willing to offer their prognostications. The 4% rule is meant to protect you against the worst case scenario, such as multiple bear markets combined with high inflation.  

And that’s your brief background on the 4% rule.  Circa 1994.

A Richer Retirement. Decades later, in 2025, Bengen is back and wrote this book to check in on his now grown up 4% rule. Does it still work? 

Well, as we would often say in my prior intelligence biz: BLUF (bottom line up front).  The BLUF here, according to Bengen, is “Yes.” 

In fact, Bengen assesses, based on several more decades worth of data, that the 4% rule could be adjusted upward to the “4.7% rule” (a slightly higher SAFEMAX!) if the fictional retiree diversifies their assets sufficiently.  If you’re not sure about this, like Ms. Anysecondnow, Bengen’s book has got about 100 tables and charts to show the financial calculations supporting his conclusions.   

My personal bottom line: That’s comforting.  As an earlier than normal retired guy, I’m actually shooting for my money to last 50 years, when I’ll be 103. I think that’s pretty safe!  So even though the book posits a higher SAFEMAX, I plan to keep my withdrawal rate at 4% or below. But it’s nice to know there’s very likely some wiggle room.¹ 

Okay, that’s a lot of preamble.  What did I think of the book?   

It is absolutely worth a read if you are interested in this stuff. As I am. Notably, you don’t have to be a finance professional to understand the text — it’s written for the layperson who is generally familiar with personal finance terminology. That said, the book definitely gets into the financial weeds here and there. I skipped over a few sections and confess I wasn’t crystal clear about a few concepts even after reading them twice. Or thrice.  

Among the things I gleaned from this book:

Taxes. Ignore taxes at your peril. And Bengen admits ignoring them, in part, to compute his scenario calculations. Actually, I agree that this is the right approach for calculation purposes. There is no feasible way to account for a near infinite amount of individual tax scenarios in a book like this.

But woe to the retiree who fails to account for taxes. As Bengen shows in the chart below, a retiree’s overall tax rate will significantly affect the SAFEMAX.

I thought the effect of taxes was such a crucial caveat that I was a little surprised that the 240 page book devotes only seven pages, including three charts, to the tax topic.

Asset Allocation. As noted above, a more diverse asset allocation was the main impetus for Bengen to raise the SAFEMAX from 4% to 4.7%. Specifically, from two assettwo asset classesThe two classes were Intermediate-Term US Government Bonds and US Large-Company Stocks. classes to sevenseven asset classesTo the Intermediate Bonds and Large Company Stocks, he adds US Treasury Bills, US Small-Company Stocks, US Mid-Cap Stocks, US Micro-Cap Stocks, and International Stocks.. So, yeah, asset allocation is a big deal. Bengen zeroes in on this topic over the 33 pages of chapter 8, which I read with much interest.

For me, chart 8.2B stood out the most. (It’s identified as 8.2A on his website for some reason).  Bengen analyzes how much the overall percentage of more volatile stock (equity) assets affects SAFEMAX. The happy conclusion, shown below, is that a retiree’s equity percentage can vary between 46% and 73% with very little effect on the SAFEMAX.

This suggests that if you plan to maintain a static allocation during retirement, an allocation of about 60% is ideal, leaving 35% for bonds and 5% for money market funds or their equivalent. — A Richer Retirement, p. 108

Bengen helpfully provides a companion website to the book, including all of his figures and charts in a zoomable color format. Thank goodness, because some of these charts approach un-readability in the black and white book format (check out Figures 8.6A and B).

The final chapter, Go Forth and Plan!, presents a nice summary of 13 key points along with important caveats.

I’m a fan of keeping my financial investments and allocations very simple. For example, I do not invest in individual stocks. Consequently, I appreciate the main takeaways of A Richer Retirement and the ease of implementing them. Conversely, readers who are more interested in examining various financial scenarios and projections will find plenty in the book to chew on.

1. Bengen constantly reminds readers — and credit to him for doing so — that every single calculations is based on past scenarios. All the future projections are just that — projections. There are no guarantees here. ︎