wooden blocks hsa and coins - health savings account retirement planning services in farmington CT
  • By Emma Andrews
  • Posted November 24, 2020

Why You Should Consider Using an HSA as a Retirement Strategy

Using a HSA, or Health Savings Account, has many benefits and should be considered when you’re planning for your retirement. The funds can contribute to any health-related issues that come up. An HSA comes with triple-tax advantages, helps with your budgeting for healthcare, and can be used in your estate plan. This makes it valuable when you are heading into retirement.

Triple-Tax Advantages

According to SmartAsset, HSAs have a rare triple tax advantage in that the money goes in tax free, grows tax free and can be withdrawn tax free if the money is used for qualified medical expenses. All of the contributions that you make to your HSA are income tax-free. Also, any interest you earn and investment growth from your deposits are also income-tax free. This is beneficial for people in retirement because you won’t have to pay more in taxes than you have to and you’ll end up saving money that you can use for something else.

Healthcare Expenses Will Eat at Your Budget

Your HSA can be helpful when you’re dealing with many healthcare expenses. Getting older is difficult and there are many health issues that come with it. Things such as cancer, arthritis, heart disease, diabetes, or hearing loss, and many more. According to Audien Hearing, hearing aids can cost an average of over $4,000. Using your HSA for your healthcare expenses will help you to manage your budget better and live in retirement without worrying about your money problems.

Use HSA in your Estate Plan

If you don’t end up using all the money in your HAS because your medical expenses happen to be lower than average, you can pass that money along to your heirs. You can leave it to your spouse. According to Estate Planning & Elder Law Services, it will stay an HSA after your death with the same tax benefits. If you choose to not leave it to anyone, it will stop being an HSA and will become taxable. Your best option will be to designate your spouse as the beneficiary or to plan accordingly for the taxes that will arise after your death.

An HSA can be a valuable asset while you’re in retirement. It can give you some peace of mind when you’re in retirement and have some medical expenses that need to be taken care of. An HSA comes with triple-tax advantages, helps with your budgeting for healthcare, and can be used in your estate plan.

We can help you to make a plan so you can be financially secure in your retirement. Contact us to get started!