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How to Turn an HSA into a Retirement Pot o’ Gold

It's that time of year when everyone is thinking about that lucky leprechaun and his Pot o' Gold.

At Further, we’re thinking about gold a little bit differently. With a health savings account (HSA), you can start planning now for your own Pot o’ Gold to be waiting for you when you retire. If you offer a high-deductible health plan paired with an HSA, this is the time of year to remind employees of the benefits of setting aside pre-tax earnings for the health care needs they face in retirement – the true pot o’ gold at the end of their career rainbow.

According to a report from the Society of Actuaries, the biggest concern for retirement for those who have high financial fragility is they might not be able to maintain a reasonable standard of living for the rest of their life. With monthly premiums and unexpected expenses, it’s important to be financially ready for retirement.

While most Americans use the balance within their HSA to pay for current health care costs, there are benefits for those who can save their HSA funds for use in retirement. Here are three tips to share with your employees:

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1. Max out your HSA contributions at the beginning of the year

Contributing the maximum dollar amount to your HSA at the beginning of each year allows you to take full advantage of the tax-free growth in your account.

This allows your funds to earn interest for the entire year – and that extra interest could result in significant savings over time.

2. Keep as much money in your HSA as possible

The primary purpose of your HSA is to use it for medical costs, regardless of your life stage. But if you can spend your HSA dollars on eligible expenses while still saving, this puts you in a good position for retirement.

Remember, you are not required to seek reimbursement for your medical expenses right away. In fact, you can reimburse yourself at any time, even years later. Your money stays in your HSA – there’s no "use it or lose it" rule. (For more tips on reimbursement, check out the Learning Center.)

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3. Investing HSA funds could result in additional gains

The money in your HSA will grow and earn interest over time if you make your maximum annual contributions.

There is potential to grow your HSA pot further if you participate in online self-directed mutual fund investments when your HSA reaches the investment point. While the stock market is never guaranteed to generate positive results, many people do see gains from investments that generate additional dividends and interest.

We’re all chasing that retirement Pot o’ Gold. For those nearing retirement, being prepared is more important than ever. And for those who are years away from retirement, it’s never too late to start saving.

This content is for informational purposes only, you should not construe this information as legal, tax, investment, financial, or other advice. Nothing contained herein constitutes a solicitation, recommendation, endorsement, or offer by Further to buy or sell any securities or other financial instruments. There are risks associated with investing in securities. Investing in stocks, bonds, exchange traded funds, mutual funds, and money market funds involve risk of loss. Loss of principal is possible.

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