Health Savings Account (HSA) for Retirement

The rest of this post will take you on that journey and land where we are today—fully funding and investing in our HSA while paying qualified medical expenses out of pocket.

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.

What Is a Health Savings Account (HSA)?

HSA’s provide triple-tax benefits, which means you can invest in your HSA with pre-tax dollars, grow those dollars tax-free, and withdraw tax-free when used for qualified medical expenses.

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.

How to Maximize the Benefits of an HSA

Opportunity to Begin Investing in Retirement Early

Last month we received a bill for $1,200. One option would have been to pay that bill using money already in our HSA.

Therefore, since we aren’t pulling that $1,200 out of our HSA, it can continue to grow tax-free for decades until we retire.

How Much Will Our HSA Be Worth At Retirement?

I am almost 40 years old and am planning to work until age 55. Therefore, if we assume regular contributions of about $7,500 per year for 15 years.

Plus an additional ten years of growth until age 65, we’ll have accumulated about $425,000. This assumes a 7% interest rate.

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