HSA Balances Are Soaring. Here’s Why It Pays to Save in One | Smart Change: Personal Finance

It’s also worth noting that HSAs effectively convert to a traditional retirement savings plan once savers turn 65. Withdrawals taken at a younger age for non-medical purposes are penalized to the tune of 20%, which is double the penalty for taking an early withdrawal from an IRA or 401 (k).

But come age 65, HSA savers can access their money for any expense and avoid penalties. In that scenario, taxes do apply to withdrawals, but that’s no different than the taxes that come into the mix with traditional IRAs and 401 (k) s.

Do not pass up a solid savings opportunity

If you have a chance to fund an HSA, it pays to do so. But if you’re going to go that route, aim to invest your HSA and reserve that money for retirement, when you’re likely to need it the most.

Devenir’s research reveals that only 7% of all HSAs have funds invested. That suggests that most savers are using their HSAs to cover near-term expenses. While that’s most certainly allowed, it’s also not the best way to make the most of an HSA.

The $ 18,984 Social Security bonus most retirees completely overlook

If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $ 18,984 more … each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.

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