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HSAs and Retirement: What You Need to Know

Vicky Warren · February 19, 2020 · 3 min read


Health Saving Accounts (HSA) benefits change as you get older, specifically once you hit 55 and again at age 65.

Let’s discuss investment options to grow your account and what to expect at age 55 and 65 regarding your HSA.

HSA investment options

HSAs offer amazing benefits above and beyond helping you pay for qualified medical expenses.

HSAs are quickly becoming an additional way to save for retirement. Many financial planners advise people to max out their “traditional” retirement saving accounts - like 401(k)s and IRAs - first and then build up their HSA.

Contributed HSA funds, which are subject to the HSA contribution limit set each year by the IRS, roll over every year. This enables your account to grow over time.

Here’s where the HSA investment option comes into play. Individuals and families can have more than one HSA. You can only contribute up to the annual limit between them, but you can have more than one.

You may consider opening one HSA to fund qualified medical expenses, and another to focus on investing.

To use an HSA for medical expenses, look for an HSA administrator offering reliable banking options along with ease of use. Conveniences like online banking and debit cards will make the account easy to utilize.

When looking for an administrator for an HSA you want to invest, look for companies offering diversified investment options. Many HSAs have multiple investment options, including mutual funds, stocks, bonds, and exchange-traded funds (ETFs) for you to choose from.

Build your HSA even faster with catch-up contributions

When you turn 55, federal rules allow annual “catch-up” contributions. Individuals over 55 are permitted to contribute an additional $1,000 a year above the annual limit.

To note, when an individual’s spouse turns 55, they cannot add their $1,000 catch up contribution to the HSA. However, the spouse can open their own HSA and contribute their catch-up contributions to that account, as long as eligibility requirements are met.

What happens when I turn 65?

Most Americans are eligible for Medicare when they turn 65. If you participate in any type of Medicare (Part A, Part B, Part C - Medicare Advantage plans, Part D, and Medigap), you cannot contribute to an HSA any longer.

However, turning 65 is when you’ll start seeing the advantages of an HSA.

Once you’re 65 and use your HSA funds for qualified medical expenses such as Medicare premiums, long-term care insurance or expenses, you’ll continue avoiding taxes.

You can also use your HSA like any other retirement account. Before 65, if you withdraw money from your HSA for a non-qualified medical expense, you must pay income tax and an additional 20% penalty. After 65, the 20% penalty no longer applies.

When you turn 65, you can use your HSA funds for non-medical expenses, once you pay the income tax.

Medical expenses tend to be higher in retirement. You may consider using your HSA funds for medical costs because you can use the money tax-free. If you’ve been building more than one HSA, you’ll have more options for using your money!

HSAs are excellent accounts to save for medical expenses and retirement. The ability to have more than one HSA allows you to build an additional “retirement basket” to utilize during your golden years!

Vicky Warren

Vicky Warren

Vicky Warren, once a nurse, now a freelance healthcare writer and social media coach.

piggy bank on pink background


2024 and 2025 HSA Maximum Contribution Limits

Lively · May 9, 2024 · 3 min read

On May 9, 2024 the Internal Revenue Service announced the HSA contribution limits for 2025. For 2025 HSA-eligible account holders are allowed to contribute: $4,300 for individual coverage and $8,500 for family coverage. If you are 55 years or older, you’re still eligible to contribute an extra $1,000 catch-up contribution.

comparing hsa versus fsa


What is the Difference Between a Flexible Spending Account and a Health Savings Account?

Lauren Hargrave · February 9, 2024 · 12 min read

A Health Savings Account (HSA) and Healthcare Flexible Spending Account (FSA) provide up to 30% savings on out-of-pocket healthcare expenses. That’s good news. Except you can’t contribute to an HSA and Healthcare FSA at the same time. So what if your employer offers both benefits? How do you choose which account type is best for you? Let’s explore the advantages of each to help you decide which wins in HSA vs FSA.

Benefits of HSA employer matching

Health Savings Accounts

Ways Health Savings Account Matching Benefits Employers

Lauren Hargrave · October 13, 2023 · 7 min read

Employers need employees to adopt and engage with their benefits and one way to encourage employees to adopt and contribute to (i.e. engage with) an HSA, is for employers to match employees’ contributions.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.



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