Fall 2014 Newsletter

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Health Savings Accounts can help with retirement

The Bank of Holland has just begun offering Health Savings Accounts, which begs the question, what are the advantages of these funds?

Employees are generally familiar with the concept of Health Savings Accounts (HSAs) as a means of putting pretax money into an account to be used for unreimbursed health care costs. Many folks, however, do not realize these funds can be rolled forward from year-to-year and allowed to grow tax-free, and later be withdrawn tax-free to pay for health care. Additionally, after age 65, you can take these dollars and use them for non-medical expenses without paying a penalty, although when they are withdrawn for other reasons, the funds become taxable income, just like an IRA.

The key advantage to using HSAs is the "tax-free" status of the funds. You lower the taxes due on your income because it is money taken out of your paycheck before taxes, the increases in value are not taxable while the funds stay in the HSA, and if you use the money for health-related expenses, you do not pay taxes on withdrawals.

According to Fidelity Investments, when a 65-year-old couple retires, they can expect to spend $220,000 on health care during the remainder of their lives. If you can put more money than you need annually into an HSA prior to retiring, you can end up with a nice nest egg to cover health care costs during retirement -- or use the money for other expenses (realizing you will pay tax on it if it's withdrawn for uses other than medical).

Last year, individuals were allowed to save $3,250 in an HSA, families $6,450. If you were over age 55, you could add another $1,000. About 72 percent of employers contribute to these funds, approximately $920 for singles and $1,600 for families. If you have spare cash, try to set aside at least twice your annual health care deductible towards your HSA and continue to contribute from year-to-year, allowing the unused portion of your fund to mount up.

HSAs do give the best tax benefits, however, they are not as flexible as a 401(k) or an IRA. If you need to withdraw the money for uses other than health costs before age 65, there will be a 20 percent penalty, for example. It's best to fund your 401(k) up to your employer's match first, then split your savings between a Roth IRA, 401(k) and HSA. Just be careful not to choose accounts with high fees that will offset the savings you receive from the tax benefits. We feel the HSAs offered by the Bank of Holland will definitely fit your health, retirement, and financial needs.

Mark L. Luderman


Be safe using your computer and mobile devices for finance

As little as 10 years ago the general public would never have thought it possible to do all of their banking on a mobile phone or computer. Nowadays, you can even deposit your checks using your phone, and you can certainly pay all your bills and do all of your banking online. While the convenience is wonderful, you do have to be concerned about keeping your accounts safe and secure to prevent your financial information from being stolen and misused. The Internet and online/mobile banking may have opened up a whole new world of possibilities to cybercriminals, but as long as you follow some basic guidelines, you can be assured your accounts will be safe.

• Passwords are a bugbear for most of us, but it is critical you use unique passwords on all of your financial online accounts. Never share them -- or your account numbers, PINs or answers to security questions.

• Financial information such as credit or debit card numbers, bank account or routing numbers, should not be stored on your computer, phone or tablet.

• Mobile device passwords are essential. Set your devices to automatically lock after a short period of time so that no one can access your smartphone, tablet or laptop.

• Do not share secure information on the phone or Internet unless you are sure who you are sharing it with. Your bank will never contact or text you asking for personal or banking information. You should always be the one to initiate contact with the bank, using the phone number on the back of your credit or debit card.

• Know where your phone and tablet are at all times, and only log on to financial websites when you have a secure Internet connection. (Public places such as coffee shops and restaurants may not be secure.)

• Contact us immediately if you think your online identity has been compromised. The sooner we know about suspicious activity, the sooner we can resolve it.

Look for `teachable' moments to share money management skills with kids

Although some might think children should receive financial literacy information at school, the best place for it to come from is the home. Parents are role models, and they are the ones to have the most influence over their children's beliefs and behaviors about money.

"Children learn so many valuable life lessons from their parents, and hopefully, financial education is one of the tools they pick up from mom and dad," said Diane Curthoys, Assistant Branch Manager, Holland. "It's important to look for `teachable' moments, real life examples of how money management works."

A trip to the grocery store can turn into a discussion on budgeting and how to identify wants versus needs. It is valuable for children to earn money of their own, and by earning their own money, they begin to understand that it is a limited commodity.

"If your child spends all of his or her money, wants to borrow from you -- and you lend him money -- you've missed the chance to send an important message," Curthoys said. "As adults, we can't just go to the money tree when we run out. We have to wait for the next paycheck to come."

The tiered system is a good way to get children thinking about budgeting. Earned cash can be split up into spending money, saving for long-term goals, and for charity. Starting out by taking 10 or 15 percent off the top and putting it into savings gets a child in the habit of paying themselves first.

"Some families don't discuss money issues in front of the children. If your child sees you set a long-term goal and delay gratification until you reach that goal, he or she is more likely to do the same. When you have a healthy relationship with money, chances are your children will too," Curthoys said.

Employees at the Bank of Holland visit our public schools to teach children about money management, and they are also available in the bank to discuss money matters with children and parents.

"We believe it's important to teach children these skills so they have the tools they need to help build strong financial futures," Curthoys said.

Reap the rewards of shopping local

by Laurie Monin, Customer Service/Head Teller

Before the Holiday shopping rush begins, those of us who work at community banks like to remind people to "Go Local" -- do as much shopping as possible with small local businesses. We have a good reason for this -- we feel our role in the community is to invest in local businesses. Although community banks make up only 20 percent of banking industry assets in the United States, community banks with less than $10 million in assets make nearly 60 percent of all bank small business loans.

Our goal is to take the funds deposited with us and make sound investments in the communities in which we do business. By supporting local business when you shop, you're putting your money back to work in the neighborhoods where you live, but that's not the only reason to shop local.

What better feeling can there be than developing a relationship with local businessmen and women like the people who work at Holland Pharmacy or Holland Hardware? How nice is it to walk into a restaurant like the Iron Kettle and get a familiar greeting from the owners? If you think you might be depriving yourself of variety, look at the selection of goods that can be found at Vidler's. And if you are looking for a unique gift, Black Star Primitives or Flowers by Nature can certainly fill those needs.

Personally, I don't save my "shop local" spirit just for the Holiday Season, I love getting to know the owners and staff at local businesses, knowing what products they carry, and, of course, getting familiar with the times of year they have sales. This personal relationship means they will go out of their way to help me find that special something for a family member or friend.

We shoppers wield a lot of power, especially during the Holiday rush, so let's help our local economy thrive and grow by supporting local small businesses. There's something in it for us, too!

Events Calendar

The Community Advent Chorale

Handel's Messiah

Saturday, December 6, 2014 7:30 pm

Baker Memorial United Methodist Church,

Center & Main Street, East Aurora, NY


41st Annual Carolcade

Saturday, December 20, 2014

7:00 – 8:00 p.m.

Historic Main Street

East Aurora NY 14052


Roycroft Winter Arts & Crafts Festival

Saturday, December 6, Sunday, December 7, 2014 10 am – 5 pm

East Aurora Middle School

430 Main Street – across from the Historic Roycroft Campus

East Aurora, NY 14052

Admission - $1.00