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I am continuing on my catch-up spree here. :) The past 5 years have been a little rough for my HSA. I contribute about $2500 per year, nowhere near the maximum. The reason is because the HSA account sits at the bottom of my savings hierarchy. My 401(k) is on top, followed by my Roth IRA and my wife's Roth IRA, followed by growing my emergency savings (liquid and slightly illiquid) beyond a 6-month reserve, and the HSA is at the bottom. My family gets hit with massive medical expenses every time I save up the maximum out of pocket of $6500. It's like a curse. Maybe if I had $6499 I'd be ok?? I've run through the kids breaking bones, myself having hernia surgery, chipped teeth and root canals, my wife's appendix bursting, and this year it was a fight against breast cancer (we won!). Your examples of HSA accounts growing don't seem to mention catastrophic scenarios or emergencies. It assumes perfect health. If catastrophes happen regularly (or semi-regularly) then there is no way an HSA could become a primary retirement vehicle. My goal for my HSA is to have a couple years of maximum out of pocket expenses. Assuming I can work until 70, I will be fortunate enough to live to 80. That's 10 years of potential maximum out of pocket expenses. What could that value be? If it's $6500 in 2022 then could I guess $8k - $10k by then? That would mean I only need to have $100k vs. something like $1MM. Even $100k seems like an impossible figure. I would caution against counting on an HSA as a retirement vehicle. A car accident, major surgery, or, as we learned, cancer will drain that fund faster than you could imagine. Use the HSA for health as intended ... use the 401(k), Roth IRA, and even taxable accounts (for early retirement?) for when you stop working. P.S. Speaking of health, pardon me for standing on a soap box, but ... please do get screenings and whatever checkups are recommended for you. Colonoscopies, mammograms, blood tests, etc. These procedures can uncover silent but deadly conditions that you would never consider happening. Both of us were diagnosed with high cholesterol yet we felt fine. My wife didn't feel any lumps, or pain yet she had Stage 0 breast cancer growing inside her.
Thanks for sharing - having emergency savings is super important. I'm a strong believer, though, that once someone has that & has no high-interest debt to deal with, then moving to increase retirement contributions & investing HSA funds towards retirement would generally be a good next step. Clearly, if a health emergency happens & you can't pay for it from savings, then you'll need to use your HSA anyway.
I have an HSA. Building it up to pay for my Long-Term Care Insurance. The premium is covered at 110% right now. ( Long-Term Care Premiums ARE allowable expenses...)
So, if you had $150k in HSA and you were 80, if you needed to enter an assisted-living facility, could you use your HSA funds to help pay for that? Perhaps combining SS with your HSA to cover the monthly fees?
Yes for question #1. You can even use your HSA money for home care & long-term care - in some cases, even long-term care insurance premiums. I've included more info here from the IRS for you. It goes through what medical expenses are covered & what aren't: www.irs.gov/publications/p502 For question #2, I'm not certain as we have not yet had a client that has done it, but I don't see why you wouldn't be able to pay with SS & HSA funds given that both belong to you. Hope this helps!
We did not take advantage of the HDHP with HSA till we retired! It is to keep the monthly payments down. Does it make sense to put money in that account now? We won’t be able to take advantage of the pre-tax option since we are retired.
If you’re drawing from Social Security, you can’t contribute to an HSA from 6 months prior to that. Otherwise, you’d need to walk through your numbers in detail to see if this makes sense for your situation.
If you are using your HSA money for non-qualified medical expenses after age 65, there is no early withdrawal penalty, but the withdrawn amount will count towards your income for the year & be taxed.
Hi Sarah. Here's three links for reference: www.schwab.com/retirement-planning-tools/retirement-calculator investor.vanguard.com/calculator-tools/retirement-income-calculator/ www.nerdwallet.com/article/finance/savings-goal-calculator. Keep in mind that these calculators are meant to give you general guidelines only & your numbers will defer depending on which calculator you use as the assumptions for each calculator will differ.
HSAs are not worth having an HDHP. I have the lowest deductible plan my employer offers(all HDHPs), and I have never reached my deductible. Might as well be flushing my premiums down a toilet
I have an HSA, which has built up to around $10,000. However, I with turn 65 in 2023. So, I must get rid of my HDHC medical plan to get a Medicare approved. I plan on investing some of HSA. HOWEVER, you can not make any contributions to my HSA when I have s Medicare approved healthcare plan. I plan on working until I am 70. I do not have any chance of getting an FSA through my employer.
Thanks for visiting our personal finance channel! We hope this content will help fast-track your financial journey! Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances. Everyone's financial journey is different. If you wish to set up a consultation call & discuss whether we can help you on an individual basis, please complete the Work With Us form on our website: www.diamondnestegg.com
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I am continuing on my catch-up spree here. :) The past 5 years have been a little rough for my HSA. I contribute about $2500 per year, nowhere near the maximum. The reason is because the HSA account sits at the bottom of my savings hierarchy. My 401(k) is on top, followed by my Roth IRA and my wife's Roth IRA, followed by growing my emergency savings (liquid and slightly illiquid) beyond a 6-month reserve, and the HSA is at the bottom. My family gets hit with massive medical expenses every time I save up the maximum out of pocket of $6500. It's like a curse. Maybe if I had $6499 I'd be ok?? I've run through the kids breaking bones, myself having hernia surgery, chipped teeth and root canals, my wife's appendix bursting, and this year it was a fight against breast cancer (we won!).
Your examples of HSA accounts growing don't seem to mention catastrophic scenarios or emergencies. It assumes perfect health. If catastrophes happen regularly (or semi-regularly) then there is no way an HSA could become a primary retirement vehicle. My goal for my HSA is to have a couple years of maximum out of pocket expenses. Assuming I can work until 70, I will be fortunate enough to live to 80. That's 10 years of potential maximum out of pocket expenses. What could that value be? If it's $6500 in 2022 then could I guess $8k - $10k by then? That would mean I only need to have $100k vs. something like $1MM. Even $100k seems like an impossible figure.
I would caution against counting on an HSA as a retirement vehicle. A car accident, major surgery, or, as we learned, cancer will drain that fund faster than you could imagine. Use the HSA for health as intended ... use the 401(k), Roth IRA, and even taxable accounts (for early retirement?) for when you stop working.
P.S. Speaking of health, pardon me for standing on a soap box, but ... please do get screenings and whatever checkups are recommended for you. Colonoscopies, mammograms, blood tests, etc. These procedures can uncover silent but deadly conditions that you would never consider happening. Both of us were diagnosed with high cholesterol yet we felt fine. My wife didn't feel any lumps, or pain yet she had Stage 0 breast cancer growing inside her.
Thanks for sharing - having emergency savings is super important. I'm a strong believer, though, that once someone has that & has no high-interest debt to deal with, then moving to increase retirement contributions & investing HSA funds towards retirement would generally be a good next step. Clearly, if a health emergency happens & you can't pay for it from savings, then you'll need to use your HSA anyway.
I have an HSA. Building it up to pay for my Long-Term Care Insurance. The premium is covered at 110% right now.
( Long-Term Care Premiums ARE allowable expenses...)
So, if you had $150k in HSA and you were 80, if you needed to enter an assisted-living facility, could you use your HSA funds to help pay for that? Perhaps combining SS with your HSA to cover the monthly fees?
Yes for question #1. You can even use your HSA money for home care & long-term care - in some cases, even long-term care insurance premiums. I've included more info here from the IRS for you. It goes through what medical expenses are covered & what aren't: www.irs.gov/publications/p502
For question #2, I'm not certain as we have not yet had a client that has done it, but I don't see why you wouldn't be able to pay with SS & HSA funds given that both belong to you. Hope this helps!
You're right about starting early! The earlier the better!
Right - so your money has more time to work for you!
Yes, we have a family plan HSA -- I was too old, but my wife wasn't! We all spend from it, not using it for retirement.
where do you recommend opening an HSA?
We have clients at both Lively and Fidelity. I find a moderate preference for the latter.
@@DiamondNestEgg thanks!
You’re welcome
So, use the HSA as a key retirement investment tool, and just pay for medical expenses out of pocket?
That’s what we do
Thx doing this now too :)
We did not take advantage of the HDHP with HSA till we retired! It is to keep the monthly payments down. Does it make sense to put money in that account now? We won’t be able to take advantage of the pre-tax option since we are retired.
If you’re drawing from Social Security, you can’t contribute to an HSA from 6 months prior to that. Otherwise, you’d need to walk through your numbers in detail to see if this makes sense for your situation.
Isn't it true that if you wait until age 67 to withdraw the funds, you can spend it on anything - not just medical expenses - tax free?
If you are using your HSA money for non-qualified medical expenses after age 65, there is no early withdrawal penalty, but the withdrawn amount will count towards your income for the year & be taxed.
My spouse has an HSA too thru has employer. Will that HSA disappear when he leaves the company. And can we combine the HSA plans?
Hi Jennifer, I don’t see the link to the retirement calculator you mentioned in this video. Can you provide the link? Thanks
Hi Sarah. Here's three links for reference:
www.schwab.com/retirement-planning-tools/retirement-calculator
investor.vanguard.com/calculator-tools/retirement-income-calculator/
www.nerdwallet.com/article/finance/savings-goal-calculator.
Keep in mind that these calculators are meant to give you general guidelines only & your numbers will defer depending on which calculator you use as the assumptions for each calculator will differ.
❤
HSAs are not worth having an HDHP. I have the lowest deductible plan my employer offers(all HDHPs), and I have never reached my deductible. Might as well be flushing my premiums down a toilet
I have an HSA, which has built up to around $10,000. However, I with turn 65 in 2023. So, I must get rid of my HDHC medical plan to get a Medicare approved. I plan on investing some of HSA. HOWEVER, you can not make any contributions to my HSA when I have s Medicare approved healthcare plan. I plan on working until I am 70. I do not have any chance of getting an FSA through my employer.