A Different Retirement Planning Opportunity

When we consider our health insurance policies, we look at things like premiums and benefits. Most of us don’t consider how that policy could help us to retire more comfortably. However, that’s exactly what it could do, depending on your exact situation and how you leverage it. It’s possible to save extra money for retirement via your health insurance policy, or at the very least prevent financial problems that set you back as you work toward your retirement goals.

Those of you with high-deductible plans might be eligible for a health savings account (HSA). You can stash pre-tax money in this account, to be used for qualified medical expenses in the event that they arise. These accounts provide a valuable tax planning benefit, and they also can also prevent situations in which you’re tempted to borrow from your retirement account to cover large medical bills.

Yet, there’s one more important benefit of an HSA: Any unused funds roll over each year! That money can accumulate in your account, free of taxation, from one year to the next. And it can even roll over straight into retirement, to be used on medical expenses then.

With healthcare being one of the largest expenses faced by retirees, it’s easy to see how accumulating money in an HSA can provide an enormous retirement planning benefit. If you’re currently maxing out your 401k or other retirement plan contributions, your HSA allows you save even more for your later years.

After you retire, the leftover cash in your HSA can be used for qualified medical expenses such as premiums, deductibles, co-pays, prescription medications, medical equipment, and even long-term nursing care. This is true whether you have a retiree health plan from your old company, or you’ve qualified for Medicare.

Of course, not everyone qualifies to use a health savings account. Talk to your health insurance representative about your options, or give us a call. We can help you identify whether this type of plan, or another creative retirement planning strategy, is right for you.