Few Americans Saving HSA Assets for Retirement
A recent article in ThinkAdvisor highlighted results from a study finding few people are using Health Savings Accounts (HSA) as retirement savings tools. For years the Potomac team has educated employers and staff on the benefits of using HSAs as retirement investment accounts, for retirement medical expenses or retirement reimbursements.
According to the LIMRA Secure Retirement Institute and Insured Retirement Institute joint study, "2 in 5 Americans mistakenly believe that balances must be spent by the end of the year or forfeited." Only a quarter of survey respondents planned to save HSA assets for future healthcare expenses.
If an employee could save $7-8,000/year in their HSA, for 10-15 years with compounded growth in a mutual fund, they could have in excess of $200,000 saved for future medical expenses. Using the IRS "shoebox rule," as long as this hypothetical employee saves their receipts, they can reimburse themselves for medical expenses at any time. This deferred reimbursement gives them the benefits of tax-free savings and they could still have leftover money for retirement medical expenses.