Simple question: should you open a 401k when you are 60 or 20? That question might differ from individual to individual or family to family. More time allows users to save and invest more, the same is true with an HSA.
Young, Healthy and Already Saving Money for Health Costs
Young, healthy individuals can take advantage of HSA benefits today by adding dedicated tax-free dollars to their HSA, This will ensure good financial health standing. If you never use these funds for health-related expenses, they can be invested and used for anything like a 401k or IRA, after the age of 65.
Get Extra Money
It is always great to get something for nothing. HSA benefits include triple-tax advantages that allow you to save pre-tax dollars, incur tax-free growth and use tax-free deductions with your HSA (as long as they are for qualified out-of-pocket medical expenses). Simply put, you are getting to keep more of your money.
One lesser known fact about the HSA is that anyone can contribute. This means your employer can add money to the HSA or even a family member. If you are lucky, you can take advantage of this HSA benefit as well.
Start Saving Early
Unlike an FSA, the HSA has no use it or lose it provision. Once you open an HSA, you can keep it as a lifetime account. You own your HSA. You can move it from provider to provider or take it with you if you move from one job to another. The money you save today, will always be there for qualified out-of-pocket medical expenses.
At a younger age, statistically, individuals spend less for health-related costs. This means you can save more now and use when health costs rise with age or as lifestyle changes dictate. It is easy to employ an ‘out of sight, out of mind’ mentality, but opening and contributing to an HSA today will save you time and money in the future.
Invest in Your Financial Health Future
HSAs are primarily used for yearly tax-free health spending. HSA investments continue to grow year over year but are an underutilized as an HSA benefit. HSA investments allow you to create the investments strategies you want. If you need that money for health expenses, you can always move it back into your HSA account.
Watch Out: Avoid Fees
Watch out for HSA providers that have hidden fees, they can depreciate your HSA balance. This can have a dramatic impact on any potential growth or compounded savings of HSA funds. If you need some help, you should know that Lively is free for individuals, and we have no hidden fees.
Activating your HSA today (as long as you are eligible) creates more options. Spend or invest your HSA money to maximize your HSA savings or growth. Don’t wait until you need it, at that point, you will be behind.
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.