Robert Farrington thinks his Health Savings Account is as great as a 401 plan and individual retirement account when it comes to preparing for retirement, and he is adamant about not spending that money unless absolutely necessary.
Health savings accounts are a great way to save for medical bills in the future, experts say. They’ve got triple tax advantages, because the accounts are funded with pretax dollars, grow with interest and investment returns tax-free and can then be withdrawn tax-free when used for qualified health care expenses.
Not everyone can afford to save for future health care, pay current medical bills and also invest for non-health related retirement needs in a 401 or individual retirement account. Similar to the approach of investing in a 401, it comes down to a balance. “They are a lifetime and life cycle tool,” said Kevin Robertson, senior vice president and chief revenue officer of HSA Bank, an HSA provider. “As we age, we are going to go through ebbs and flows of our needs surrounding health care.
The goal, when possible, is to hold off on spending in an HSA as long as possible, as they provide an extra layer of comfort come retirement. Health issues are the top retirement concern for adults over 65, versus running out of money or their lifestyle, a Franklin Templeton annual survey released last month found. Older Americans are worried about medical expenses, and half said they don’t know how they’ll pay for health care in retirement.
Pretty simple. If you need it, use it. If you don’t need it, don’t use it.
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Source: Forbes - 🏆 394. / 53 Read more »
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