Waldo State Bank Blog

Leveraging Your HSA for Retirement

Leveraging Your HSA for Retirement

If you read our last blog about the Advantages of an HSA Account, you have learned that you can use your HSA contributions after retirement. What you might still be wondering is how to best leverage your HSA for retirement, so let's explore what an interest-bearing HSA account at Waldo State Bank can do for you.

Tax-Free Three Ways

One of the most significant advantages of an HSA account is that it is tax-sheltered in three ways; putting money in is tax-free, letting it sit and grow is tax-free, and withdrawing it is tax-free! This three-way tax-shelter is something that even 401(k)s and IRAs cannot compete with as they are both taxed upon withdrawal of funds.

Using Your HSA for Medical Costs

Perhaps the most obvious use for your HSA is for medical costs, especially considering medical expenses are typically the most significant expense for retirees. However, there are multiple ways to leverage your HSA for medical expenses that will also help you reach your individual financial goals.

  • You can make regular withdrawals for reimbursement of medical expenses before retirement and hope there may be some leftover when you do retire.
  • You can contribute to your HSA without withdrawing prior to retirement in order to have the full amount available post-retirement for medical expenses.
  • You can save receipts before you sign up for Medicare* and cash them all in at once for a significant payout upon retirement.
  • If you retire prior to 65, you can use your HSA to cover medical expenses until you qualify for Medicare.

*One important note about HSAs is that you are not able to contribute to an HSA once your Medicare coverage starts.

Using Your HSA for…Well Whatever You Want

While you can certainly use your HSA for medical costs, utilizing it in retirement is not just limited to this either. Yes, you heard us right; it gets even better. After the age of 65, you can withdraw funds from your HSA for any purpose, like moving somewhere that is warmer than negative 50 degrees in the winter or buying that vintage sports car you've always wanted. Your withdrawal is penalty-free but will be taxed at your normal tax rate the year you make your withdrawal if not used for medical expenses.

In short, if you're exploring what would be a good savings account for retirement, consider an HSA account with Waldo State Bank. Do you want to learn more about HSAs and what they can do for you? Speak with a member of our team today!

Do you want to learn more about HSAs? Make sure to check last week's blog on Advantages of an HSA Account!

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