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Estimates show that an average couple will spend as much as $260,000 on health care costs in retirement. With many organizations shifting towards high-deductible health plans, HSAs are becoming a hot trend for employees across the country.
HSAs are designed to save for out-of-pocket medical expenses. This means employees can use these funds to pay for qualified medical expenses such as premium payments, deductibles, copays, and prescriptions. But they also make great retirement savings vehicles. You can fund the account today, allow your money to grow over time, and use it for your future medical costs. Your future self will thank you.
What should you know?
There are 3 ways you can save on taxes with an HSA:
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Contributions aren’t subject to federal income tax. If you contribute through payroll, your money goes in pre-tax. If that’s not an option, you can deduct it from your taxes later on.
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HSAs can be investment accounts, and the growth of your account from interest or investment returns is tax free.
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Take your money out for a qualifying medical expense anytime, tax-free! And once you reach age 65, you can withdraw the funds in the HSA as ordinary income just like any other retirement savings account.
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Consider an HSA to help you pay for medical expenses today, tomorrow, and in the future.