Every American would like to think that after a long career of working for a company or years and years of hard work that they can become financially free. After all, they don’t call them your golden years for nothing. However, health savings accounts aren’t only for retirees, and if you think that you should build up capital in your HSA for retirement, you might want to think twice about the implications of our investment. It is true that they offer fantastic tax breaks, and for this reason many people look for a place to stash their nest eggs away. But should you use an HSA for retirement, or should you use an HSA for unforeseen medical expenditures?
Healthcare or Retirement Augmentation?
More and more people every day are viewing their HSA as a means to supplement their retirement savings and income. After all, there are so many favorable tax breaks that you would be ignorant to not invest in an HAS and later use those funds for something else should you not need healthcare money. Isn’t that right?
It isn’t uncommon for retirees to invest in an HSA as a fallback in case they don’t have enough capital for retirement and they don’t need extra money for healthcare expenses. In fact, many people are using these account types as a supplement to their 401k’s. However, you should know that an HSA doesn’t work in the same way a 401k or other retirement plans work.
Healthcare and Retirement Funds are Separate
In order to maximize your investment in retirement savings, you should first max out your IRA and 401k savings first, and only then move on to an HSA plan – that is, if you are viewing an HSA as a retirement fund.
On the other hand, if you are smarter than the average bear and want to make certain you don’t encounter any undue healthcare expenses that would break the bank, you should set money aside in an HSA.
Even if you are a healthy individual, it is more than likely that you will need healthcare eventually. Instead of leaving it to chance, you would be much more financially savvy to set money aside for a surprising healthcare expense. Your employer likely won’t pay for insurance after you have retired, and you will be ahead of the curve if you already have invested money to combat this surprise of life.
How Should You Invest?
It is true. Though an HSA is not a Roth IRA or other form of retirement account, it does give you some flexibility in how your funds are used. Just remember this: you will be much better prepared if you open an HSA for healthcare only. If it turns out that you don’t use these funds at all, your loved ones will benefit if you name a beneficiary. In the event that you need these funds for healthcare, then you will ensure that your loved ones aren’t burdened by your health status.
Finding Help with Insurance Plans
If you live in the greater Chicago area, don’t hesitate to contact Benefits Age. We can help ensure the future of your loved ones with the insurance plan that’s right for you.