RRA Educational Resources/Blog/HSA: A 401(k) for Healthcare Costs

HSA: A 401(k) for Healthcare Costs

Not your typical retirement account, a Health Savings Account allows you to set money aside to pay for qualifying medical expenses. Being able to contribute now will make retirement easier later. Good news: Contributions are tax-deductible AND never expire!

Here’s why you should consider an HSA.

A tax break today and save for your tomorrow.

Contributions to HSAs reduce yearly taxable income similarly to 401(k)s. In 2022, families can contribute $7300 into an HSA while individuals can contribute up to $3650. Those 55+ can contribute an extra $1000 to these.

However, to have a Health Savings Account you need to have a qualifying high-deductible health plan. Typically, this is $1400 for individuals or $2800 for families. Please note these vary by marketplace.

Even with the contribution limits a fraction of what 401(k) limits are, you are saving money today that will help aid in medical costs in your retirement. The saying does go, “slow and steady wins the race,” right?

Three cheers for tax-free withdrawals!

You read that right. You can withdraw tax-free for your medical expenses at any age. However, if you are planning to save this for your retirement, pulling from your HSA should be avoided.

Now, you may also use your HSA for nonmedical withdrawals, but you will have to pay income taxes and a penalty tax should you do so before age 65. The taxes are higher than if you pulled from your 401(k) early. Luckily, once you are 65, HSAs are tax-free medical withdrawals and mimic 401(k)s.

Zero required minimum distributions

Unlike 401(k)s and other retirement accounts like Roths, HSAs do not have RMDs. Without having to worry about this, you can leave your funds in the HSA for as long as you would like!

Want an HSA?

​HSAs make great additions to retirement plans, and you can open one with banks or brokers. Once opened, the freedom an HSA offers is yours!

See other posts like this one:

Thursday, March 28, 2024

In 2024: What Medicare Could Cost You

Friday, March 01, 2024

Building Cash Flow in Retirement: Income Diversity Strategies

Wednesday, February 21, 2024

Why Legacy Planning is Part of Smart Retirement Planning

Thursday, February 15, 2024

How a Living Will Can Help Your Retirement

Friday, February 09, 2024

Retire Right: Ditch the Traditional Plan, Embrace Your Risk-Based Freedom

Thursday, February 01, 2024

From Pensions to 401(k)s: Shifting Risks in Retirement

Wednesday, January 24, 2024

Why Today’s Retirement Isn’t Like Your Parents’

Friday, January 19, 2024

Roth vs. Traditional Accounts for Pre-Retirees

Thursday, January 11, 2024

Pioneers of Risk-Based Retirement Planning

Thursday, November 30, 2023

Understanding Linked-Benefit Long-Term Care

Wednesday, November 22, 2023

Which is Best: Annuity or LIRP? Or Both?

Thursday, November 09, 2023

You Can Unlock Your Home Equity for Retirement

Wednesday, November 01, 2023

What Is a Second-To-Death Life Insurance Policy?

Friday, October 27, 2023

Beneficiary IRAs: Preserving Your Legacy for Future Generations

Thursday, October 19, 2023

Steady Stream of Retirement Income

RETIREMENT PLANNING

CONTACT US

1309 Coffeen Avenue, Suite 3851, Sheridan, WY 82801

Email: support@retirementriskadvisors.com

Toll free: 1 (855) 491-0400
​Text us at: 1 (307) 264-2902

logo.png

© COPYRIGHT RETIREMENT RISK ADVISORS. ALL RIGHTS RESERVED.