Building A Stronger Retirement

With each generation’s expected retirement time growing longer and longer, you may need to plan for 20 to 30 years of life after you stop working. And when it comes to ways to save for the future, many Americans think first of the 401(k), the most popular and well-known retirement savings option.

Lesser known—and understood—is another way to save for your future: the Health Savings Account (HSA). With rising healthcare costs that can exceed $10,000 annually during the retirement years, HSAs are gaining more recognition as a smart way to complement 401(k)s and other retirement savings options by helping you plan and save for healthcare costs encountered now and in the future.

Traditional 401(k) plans are popular retirement vehicles for several reasons: tax advantages, more control, and compound interest. Plus, it moves with you: The money in your 401(k) belongs to you—even if you change jobs, you can keep your money invested and growing.

If you save in your HSA as well as a 401(k), you can take advantage of three unique benefits:

1. Triple-tax advantage: No federal taxes on contributions, withdrawals for qualified medical expenses, or investment earnings
2. Build long-term healthcare and retirement savings: Especially with HSA Bank’s self-directed investment options
3. No “use it or lose it”: Investment balances carry over from year to year and grow tax-free (just like the HSA cash account)

Tax-free HSA fund withdrawals are limited to IRS-qualified medical expenses, but there’s a lengthy list of future healthcare costs your HSA can pay for, so your 401(k) funds don’t have to. These include everything from acupuncture to a wheelchair and many things in between.