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 at (603) 261-3736, and we’ll work to help you determine the best route to finding the Holy Grail.
Adapted from U.S.News1
Bob has a passion for making your money work hard for you. He takes profound joy in ironing out a plan for a long and comfortable retirement, no matter what your current income or level of wealth. With a work ethic second to none, he has a zeal for transforming uncertainty into stable ways for you to protect your future and your family. He knows that the quality of your life you enjoy today can remain as rewarding—or even better—after retirement.
With a strong background in information technology, Carol is instrumental in building operational policies and strategies that keep the organization functioning smoothly. Carol’s organizational skills and her flexibility to jump from priority to priority along with her commitment to customer service makes her an essential part of the Grimard Financial team. When Carol is not working with the Grimard Financial Family, she is a very creative and accomplished photographer.