How often do you think about your retirement? Are you a few years away or have years and years to go? No matter where you are in your life or with your retirement plan, you can always save more.
Saving for retirement is one-part discipline, one-part contributions and maybe even a dash of IRS know how. The more you can save, tax-free, the more you have to invest for retirement. Keep more of your money today, so your nest egg can turn into a beautiful peacock and not an ugly duckling. Let us show you how.
100% Tax-Free Retirement Savings: HSA
You might already be saving in traditional retirement accounts like a 401(k) or IRA, but what if you want to save more or add more flexibility to your retirement strategy? You might feel hamstrung with your current options. Enter the HSA.
An HSA or Health Savings Account is a personal savings account for health expenses. HSAs are owned by individuals and can be taken from job to job or moved from provider to provider. Once you save HSA funds, they are yours for life.
Why should you care? Three words – triple tax advantages. HSAs allow for tax-deductible contributions, tax-free interest and tax-free withdrawals (for medical expenses). In 2019, individuals can contribute up to $3,500 in tax-free savings and families can contribute $7,000.
After the age of 65, you can use those funds for anything, not just medical expenses, just like a 401(k) or IRA. To top that off HSAs don’t require mandatory distributions in retirement. You can keep any HSA investments as is and let them grow well into your 70s, 80s, and 90s.
Bonus: Save for Healthcare Costs Today
One shortfall of traditional retirement accounts like a 401(k) or IRA is that you can’t access the money today (unless you are willing to pay an IRS early withdrawal penalty). With an HSA you have the flexibility to pay for qualified out-of-pocket medical expenses, 100% tax-free today. Or you can choose to save or invest your HSA funds for years to come.
Today, HSAs help reduce the yearly real cost increases in healthcare. For tomorrow, HSAs provides the savings you might need for unexpected health costs or as extra retirement savings. HSAs might have been intended for health savings, but their retirement value is equally as attractive. Are HSAs the new stealth IRA? That’s for you to decide.
You can check to see if you have an HSA-eligible health plan and open an HSA here.