Discover the Secret Savings of Your HSA

Most people are familiar with HSAs—these accounts are designed as a way to accumulate tax-exempt funds to help pay for certain medical expenses. However, they can only be used in conjunction with a qualified high-deductible health plan. These handy accounts can also be an option to assist you in structuring your retirement savings.

Tax benefits of HSA accounts
Why are HSAs so attractive to people saving for retirement? Matt Meese, wealth management team sales manager for Mountain America Credit Union, explains, “The main reason is because of the triple tax benefit. The money is tax-deductible when you add it to your account, it grows tax-free and then you can withdraw the funds penalty free for any qualified medical expenses.”

Wouldn’t it be great to have an account that you could pay into while you’re working, and then use for medical expenses once you retire? Because there is no “use it or lose it” rule for HSAs, the funds can be rolled over year after year. This allows you to accumulate money over many years without a dramatic impact to your bank account. And, since most of us have more frequent medical issues in our later years, it can put your mind at ease knowing you have money set aside.

Matt adds, “You can even use these funds for non-medical expenses with the tax-free benefit after turning 65. If you do it prior to that time, you’ll pay a 20% penalty.”

Before you decide to incorporate this strategy into your retirement plan, talk with your financial advisor. The qualifying health plan that’s required to utilize the HSA isn’t for everyone. Discuss your current medical needs and see if it makes sense.

Don’t ignore other retirement investments
If you determine that this route is for you, keep in mind that there are contribution limits to HSAs—$3,400 (single) or $6,750 (family) per year. At age 55 or older, you can contribute an additional $1,000 a year as “catch-up.”

This account alone won’t cover you in retirement, especially if you’re withdrawing some to use for medical expenses along the way. But it’s a great way to amass an ancillary fund to help bridge the gap.

Looking for other retirement savings options? Mountain America Credit Union has financial advisors that can guide you forward to a retirement strategy that’s perfect for you. All it takes is a conversation. Schedule an appointment today to get started.