Once you hit age 55 or so your retirement planning shifts from decades of focusing on “save, save, and save more” to scoping out how much income all that savings might generate for you once you do retire.

And that can be a taxing eye-opener. Withdrawals from many of the most popular retirement accounts will trigger a hefty tax bill.

All the money you have saved in a traditional 401(k) or traditional IRA will be taxed as ordinary income when you withdraw it in retirement. For instance,  if your plan is to generate $4,000 a month in monthly income from your traditional retirement accounts, you would likely need to withdraw $4,800 or more to net $4,000 after paying federal tax (and potentially state tax depending on where you live.)

Giving that tax reality, a smart strategy once you hit 55 is to consider ways to save over the next decade or so that will give you access to tax-free income in retirement.  The two best options are a Roth 401(k) and a health savings account (HSA)

If you’ve had your 401(k) savings on autopilot for years, check with your plan to see if it now offers a Roth 401(k). Withdrawals from a Roth 401(k) will be tax-free.

HSAs: A smart late-career way to save for retirement

An HSA is an even more powerful way to generate tax-free retirement income. Like a Roth 401(k), withdrawals can be tax-free, and while the money is invested in the HSA account there is no tax bill. An HSA also gives you an upfront tax-break: the money you contribute is tax-deductible. That’s a better deal than even a Roth 401(k). With a Roth 401(k) your contributions come from salary that has already been taxed.

In retirement any money you have saved in an HSA can be withdrawn tax-free as long as the money is used to pay for qualified health care expenses. You can use HSA savings to pay for today’s bills, or you can keep the money growing and plan to use it to cover your out-of-pocket medical expenses in retirement.

Medicare covers about 70 percent of retirement health care costs. The other 30 percent is on your tab. Over a retirement that can span 20 years or more, that’s going to add up. The non-partisan Employee Benefit Research Institute (EBRI) estimates a 65-year old woman today with median prescription drug costs in retirement will need $163,000 to have a high probability of covering her lifetime retirement medical costs. For a 65-year old man, the tab is $175,000. (Women live longer than men, on average.)

HSA payoff at 65

To be eligible for an HSA you must be enrolled in a high deductible health insurance plan (HDHP). If your goal is to use the HSA as a stealth retirement account for the next 10 years or so, you need to carefully consider if you have the cash flow to cover a higher deductible for any care right now. Sure, you’re 50-something years young, but we all know aches, pains and illness are often a part of the aging process.

If you’re comfortable with an HDHP, this year an individual at least 55  who is enrolled in an HDHP is allowed to save $4,500 in an HSA. If you’ve got family coverage, you can contribute $8,000. Those limits are periodically adjusted to account for inflation, but let’s say you contribute those sums each year for the next 10 years and invest in a somewhat conservative mix of cash, bonds and stocks that generates a 4 percent annual return. In 10 years you could have more than $55,000 if your coverage was just for you. If you have family coverage and save the current max of $8,000 your account could be worth nearly $100,000.

You can’t contribute new cash to an HSA once you hit 65 and are enrolled in Medicare. But the money already in your account can be tapped tax-free to pay for health care expenses, and what you don’t use can keep growing for your later years.

Related Readings:

• HSA Catch-Up Contributions

• Best Financial Decisions in your 60s

• How to Use Your HSA for Retirement