Pre-tax contributions, tax-free withdrawals, and tax-free gains = the Holy Grail of savings opportunities. If you estimate yourself at the 25% tax bracket when you retire, and you put $60,000 into a savings account, you lose $15,000 to taxes; but if you put it in an HSA, you'll have the same $60,000 when you need it. By not contributing to this account, you could be missing out on tax benefits, as well as the opportunity to build additional savings for your retirement.
Tips for using your health savings investment account as a valuable retirement planning tool:
Open an HSA investment account
If your employer doesn't offer an HSA option or you're currently not working, you can open your own investment account at most banks or credit unions. When setting up an HSA for retirement savings purposes, look for a bank that provides the best returns. Be cautious, as fees for some investment accounts can be high, so it's best to read all the fine print and shop around.
Contribute the maximum allowed
If you're short on time or over age 55, you're entitled to make catch-up contributions, and with the tax benefits of an HSA, there's no reason not to do this. Additionally, you'll want to contribute the maximum possible annually to get the most from this savings opportunity. There aren't financial limits on an HSA like you experience with an IRA, so save away!
Save your receipts and let your balance grow
If you have the means, pay your bills out-of-pocket until you retire, giving your money the longest time to grow. If you go this route, keep your receipts. Then, when the time comes, you can reimburse yourself for medical expenses via your HSA. This process can come in handy if you happen to retire before your Social Security payments begin.
Everyone’s situation is different, and your retirement investment plans are unique, so give us a call, and we'll work to help you determine the best route to finding the Holy Grail.
This document is for educational purposes only and should not be construed as legal or tax advice. One should consult a legal or tax professional regarding their own personal situation. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products offered by an insurance company. They do not refer in any way to securities or investment advisory products Insurance policy applications are vetted through an underwriting process set forth by the issuing insurance company. Some applications may not be accepted based upon adverse underwriting results. Death benefit payouts are based upon the claims paying ability of the issuing insurance company. The firm providing this document is not affiliated with the Social Security Administration or any other government entity.
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