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HSAs Help Level Up Your Retirement Planning

Jun 2, 2021 8:00:00 AM

The health savings account (HSA) market continues to boom.

The latest HSA market research conducted by Devenir estimates the total number of HSAs nationwide surpassing 31 million accounts, with HSA assets exceeding $87 billion. Clearly, consumers of all kinds are seeing all the benefits pairing a high-deductible health plan (HDHP) with an HSA offers and adjusting their health insurance choices accordingly.

Perhaps more telling than the continued rise of both HSA numbers and HSA assets are three key facts:

  1. Interest in HSA investing is rapidly growing
  2. HSA investment asset growth is soaring
  3. HSA contributions are outpacing HSA withdrawals

These three facts point to a clear trend—more and more savvy HSA accountholders are realizing that HSAs aren’t a 12-month spending account. The real power of an HSA comes by way of savings and its ability to be leveraged as a critical long-term investment vehicle—for retirement and beyond.

Viewing HSAs Beyond Their “Triple Tax Advantage”

Choosing HDHP coverage and opening an HSA offers many advantages and can help you keep more of your hard-earned money while lowering your overall healthcare costs.

The primary driver for choosing to open an HSA typically revolves around an HSA’s unique triple tax advantage. In short, contributions can be made tax-free, withdrawals for any HSA-eligible expenses can be made tax-free and account growth, including investment returns, is also free from taxes.

While HSA tax savings, unmatched flexibility and portability can’t be overlooked, the key to boosting your long-term overall financial wellness lies in the third element of an HSA’s triple tax advantage—tax-free account growth and investment returns.

More HSA Accountholders Harnessing the Power of HSA Investing

As more HSA accountholders understand an HSA’s potential beyond the 12-month cycle, HSA accountholders from all walks of life are shifting from spending to saving and taking advantage of their HSA as a long-term retirement saving tool.

The Devenir HSA market data confirms this HSA investment trend.

As of the end of 2020, around 1.7 million HSA accountholders were investing a portion of their HSA funds. HSA investment growth rose a staggering 52% from 2019 to 2020 alone. And HSA accountholders contributed nearly $42 billion to their HSAs in 2020—an 8% increase from 2019—even despite the pandemic—while only withdrawing around $30 billion from their HSAs.

The numbers paint a clear picture, and all signs point to more and more HSA accountholders using their HSAs to level up their retirement planning.

The HSA Flexibility You Need Into Retirement and Beyond

With an HSA, flexibility is key. And that includes HSA investing.

What makes investing through your HSA so advantageous is that even when you’re focused on using your HSA for long-term saving and reaping the rewards of tax-free investment account growth, you can always access your HSA funds whenever you need them.

If your circumstances change or if you’re faced with an unexpected healthcare expense, you can take advantage of your HSA funds at any point now or in the future if you wish to either reimburse yourself with tax-free dollars through your HSA or pay upfront with your tax-free HSA funds.

Remember—with an HSA, there’s no time limit on HSA reimbursement as long as the expense is HSA-eligible and was incurred while your HSA was open. So most often, you can stay focused on the long game, even if you have to adjust your approach temporarily.

And when it comes to taking advantage of all your HSA funds come retirement, the flexibility continues. You can use your HSA just like an IRA or any other retirement account, both for healthcare expenses and any other expenses you choose once you turn 65.

You read that right. Once you’re 65, you can use your HSA funds for anything you wish—not just for healthcare expenses. But when you consider that the latest figures estimate an average retired couple age 65 in 2021 will need around $300,000 to cover healthcare expenses throughout retirement, you can see just how important having a well-funded HSA in retirement can be for your overall financial health and well-being.

Get Best-in-Class HSA Investment Options With Bend

Bend HSA is a platform built to make every aspect of the HSA journey easy for everyone—including HSA investing.

With a variety of best-in-class investment options seamlessly integrated into the Bend HSA experience, you’ll be able to get started investing your HSA dollars quickly and easily and taking positive strides toward better financial health now and into the future.

With a Bend HSA, you don’t have to be a financial expert to maximize your health savings account. In fact, you can get started on your path without any HSA knowledge at all. And remember, who you choose as your HSA provider is your choice—even if you already have an existing HSA. You can also have more than one HSA, so don’t hesitate on choosing Bend now to take advantage of our leading investment options and everything else we offer.

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