BLOG
Benefits

HSA: A Secret Retirement Weapon

2 min read

30 sec brief

An HSA is defined as a health savings account, which infers it’s best used for health expenses. But what if it’s retirement savings value matches traditional retirement savings vehicles? Would you re-think the value and benefits of an HSA?

An HSA is defined as a health savings account, which infers it’s best used for health expenses. But what if it’s retirement savings value matches traditional retirement savings vehicles? Would you re-think the value and benefits of an HSA?

HSA as a Supplemental Retirement Benefit

HSAs might have become a retirement vehicle by accident, but they provide a clear and actionable way to save tax-free dollars in addition to a 401k or IRA contributions. All of these retirement savings vehicles have clear advantages (and limitations), but can be used separately (or in conjunction with one another) to maximize advantageous tax and investment incentives to save money for retirement.

HSA Retirement Tax Value

The tax value is a wonderful HSA perk.

  1. First and foremost, after the age of 65, you can use HSA funds for anything you want, not just qualified out-of-pocket medical expenses, just like a 401k or IRA.
  2. Unlike a 401k or IRA, an HSA is the only retirement tool that allows you save pre-tax money and use pre-tax dollars to pay to for qualified out-of-pocket medical expenses. With healthcare retirement costs now projected to exceed $275,000 per couple, wouldn’t you prefer to pay for those costs completely tax-free?

Unlike a 401k or IRA, an HSA has no mandatory distributions, so you can let your HSA grow for years and years to come, well into retirement. Invest and Rest!

What to Consider: Short vs. Long-term HSA Savings

The flexibility of an HSA creates many paths. You can use it for tax-free contributions to pay for recent qualified out-of-pocket medical expenses. Or, you could opt to pay for those expenses with your normal savings account, taxable income or otherwise, and save your HSA money.

Both options leverage the short-term value of tax-free HSA contributions. However, by paying for medical expenses out-of-pocket this year, you could save HSA money, invest it, leverage the power of market growth to further grow your HSA balance. What option works best for you?

Understanding HSA eligibility and contributions details allow you to make the best financial decisions for your health, savings, and even retirement. Dissecting the value of your HSA takes time. Don’t skip on the details so you can get the most of the available HSA benefits.

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.

About the author

Lively

We are HSA Experts! Lively is a Health Savings Account (HSA) platform for employers and individuals. A 401(k) for healthcare.

Ready to get started?

See Why Lively is the #1 Rated HSA Provider