Health Savings Accounts
Are you looking for easier and more helpful ways to save for retirement other than a workplace contribution plan? A health savings account (HSA) can be used for healthcare costs while you are working and once you retire, most withdrawals are free from tax, you can invest your contributions and use it later and any unused sum at the end of each year rolls over for the duration of your plan. Whether you need to access money from the account tomorrow or in 10 years, it will be there for you without penalty in most circumstances.
What are some of the types of Medical Expenses that could be covered?
The following are just some of the medical services for which you can use your tax-free funds without penalty at any time:
- Medicare Premiums
- Hearing Aids
- Physical Therapy
- Hospital Visits
- Walkers and Wheelchairs
- In-Home Nursing Care
- Long-Term Care Services
- Nursing Home Fees
- Retirement Community Fees
- Lodging and Meals for Travel Medical Care
- Long-Term Care Insurance Premiums
Ways to Manage Your Contributions
The best practices for managing these health accounts include to invest your contributions, maximize your contributions and time your withdrawals accordingly. If you choose to invest your funds to increase your returns, be sure to select low-cost, high-quality opportunities. It is also important to try to max out your contributions each year. Depending on the age at which you begin to save, you could potentially save over $1 million for your future medical costs. Keep in mind you can contribute an extra $1,000 annually once you turn 55. Try not to spend your contributions other than those you are required to spend before you max out the plan. This will make life much more manageable in your later years and allow your investment returns to grow as much as possible.
One never truly knows how much money will be necessary to pay for healthcare expenses for the rest of your life. A health savings account is an ideal way to pay for your possible medical expenses once you retire and even before. The money is tax-free and it lowers your taxable income, so what are you waiting for? Open an HSA today and begin planning for your future medical expenses.
We all have goals when it comes to our finances. David Gulacsy created Sandhill Wealth Management to help you with plans to help you achieve your dreams.