First of all, “savings accounts” in general have received a terrible reputation given that they’ve paid almost no interest for more than a decade.
A health savings account (hsa) is a tax-exempt trust or custodial account you set up with a qualified hsa trustee to pay or reimburse certain medical expenses you incur.
This year we decided not to pay our medical bills from our HSA funds. This is where the magic of an HSA comes into play.
We’ll have accumulated about $425,000. This assumes a 7% interest rate.
How Much Will Our HSA Be Worth At Retirement?
Step 1 Determine if your employer offers an HSA option and enroll if available.
Step 2 Fund your HSA account. The maximum annual contribution for 2021 is $7,200 and will likely increase slightly every year or two.
Step 3 Pay medical expenses out of pocket and invest your HSA funds. This is the key if you want long-term compound growth in your HSA.
Step 4 Save your receipts for qualified medical expenses. We save all of our receipts in a simple Google Document that can be accessed through Drive.