Your Health Savings Account Might be the Most Overlooked Retirement Tool You Have
The Basics of HSAs
Often, people are unaware of Health Savings Accounts (HSAs). Many people think of them as an account to save money for prescription drugs and co-pays. But in practice, an HSA may provide much more, especially when it comes to retirement planning.
Here's what differentiates them:
Contributions are not subject to taxes.
Your money grows without having to pay taxes
As long as it is used for qualified medical expenses, you are able to withdraw it tax-free
That combination is unusual. However, many people aren't making the most of their HSAs.
According to recent data, most HSA customers keep their money in cash rather than investing it. Many people just do not realize that investing is an option.
Additionally, you might not consider building the account for the future if you're utilizing it tocover current medical bills. However, there is plenty of potential if you can change your approach just a little.
Here's a simple way to rethink your HSA:
Keep enough in cash to cover your deductible or what you expect to spend on healthcare this year
Invest the rest — this money can grow over time, just like your IRA or 401(k)
Save your receipts — they never expire. If you pay out of pocket today, you can reimburse yourself later with tax-free dollars
And past the age of 65?
Your HSA can be used for more than just medical costs. For non-medical withdrawals, you only have to pay standard income tax (no penalties).
Why this is Important:
According to Fidelity Investments’ 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout retirement. Your chances of success will increase with your ability to plan ahead. When used properly, an HSA can be very beneficial.
If you think an HSA account would be a good fit for you or have any other questions, pleasecontact us at 708-665-6663 or advisors@4wealthfg.com. Or, visit 4wealthadvisors.com/get-in-touch to fill out our contact form.
