Health care is one of the biggest expenses you’ll have in retirement. So, putting money aside is very important. A few other reasons are:
- You can invest & potentially grow your money:
HSAs have investment options, too. This is a great way to potentially help pay for your health care costs in retirement – if you can afford to not use the money now. Invest and give your funds the opportunity to build until you’re ready to retire.
- You get triple tax benefits:
- Lower income taxes – potentially: Money going into your HSA comes out of your paycheck. So, your taxable income goes down, which means you could pay less in income taxes.
- Tax-free investment growth: You don’t pay taxes on your earnings.
- Tax-free withdrawals: You don’t pay taxes on your money as long as you spend it on qualifying health care costs.*
*HSAs are not taxed at a federal income tax level when used appropriately for qualified medical expenses. Also, most states, but not all, recognize HSA funds as tax-free. Please consult a tax advisor regarding your state’s specific rules.