30 sec brief
Saving for retirement takes discipline. You might be surprised to learn that it takes some creativity as well. Saving for retirement with traditional retirement vehicles, like a 401(k) or IRA is only part of the tax-advantaged opportunity.
Retirement costs are not just limited to the cost of living, in fact, medical expenses play a big role. You need to plan for all of the expected costs for retirement. What you might not know is that medical costs are expected to exceed $275,000 per couple in retirement. We will show you how to plan for those expenses in addition to or in lieu of traditional retirement vehicles like 401(k) or IRA.
Traditional Retirement Vehicles
Traditional retirement vehicles like a 401(k) or IRA offer a great way to save dedicated funds for retirement. These tax-advantaged accounts ensure you have savings ready. However, they lock the funds (or force you to pay a tax penalty) to access your savings early. What if you want to add flexibility and long-term savings. Are there any non-traditional or newer tax-advantaged retirement accounts?
HSA for Retirement
Like flexibility? Like 100% tax-free savings, investments, and spending? You just might like an HSA! While an HSA or Health Savings Account creates dedicated funds for medical expenses, they have a very similar tax structure, along with all of the tax-advantaged account requirements you expect. It also creates an additional way to save pre-tax dollars for retirement, just like a 401(k) or IRA.
HSAs might not have been intended for retirement, but their IRS tax structure allows for pre-tax contributions, tax-free growth and tax-free distributions (if used for qualified medical expenses). If not, after the age of 65, you can use them for anything just like your 401(k) or IRA savings.
HSA + 401k or IRA = Retirement Success
Saving for retirement shouldn’t be an either-or limitation. Use traditional retirement vehicles like a 401(k) or IRA in combination with a non-traditional retirement vehicle like an HSA, to get the most the IRS will give you. More tax-free savings is better!
Combing an HSA with a 401(k) or IRA creates short-term tax-free funds for medical expenses and maximizes retirement savings. Don’t miss out on this extra retirement tax-savings, open an HSA!
About the author
We are HSA Experts! Lively is a Health Savings Account (HSA) platform for employers and individuals. A 401(k) for healthcare.