{"id":2994,"date":"2026-06-05T23:05:33","date_gmt":"2026-06-05T23:05:33","guid":{"rendered":"https:\/\/orlandorelocationreport.com\/?p=2994"},"modified":"2026-06-05T23:05:33","modified_gmt":"2026-06-05T23:05:33","slug":"the-savings-game-hsas-are-a-very-effective-retirement-planning-tool","status":"publish","type":"post","link":"https:\/\/orlandorelocationreport.com\/?p=2994","title":{"rendered":"The Savings Game: HSAs are a very effective retirement planning tool"},"content":{"rendered":"
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In previous articles, I have pointed out the several advantages of health savings accounts (HSAs).<\/p>\n

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In a recent article, Forbes contributing writer\u00a0Bob Carlson\u00a0pointed out that by the end of 2026, it is expected that there will be approximately 44 million HSA accounts; at the end of 2022, there were approximately 35 million. The amount of money already invested in 2026 is approximately $159 billion; in 2022, the amount invested was $104 billion. At the end of 2024, the average balance was $3,731, or $6,564 for account holders aged 55 and older.<\/p>\n

You are allowed to establish an HSA and continue to make contributions as long as long as you are covered by a high-deductible health insurance plan. The maximum contribution in 2026 is $4,400 for individual coverage, and $8,750 for family coverage. An additional $1,000 catch-up contribution is allowed for those 55 and older. You can contribute until you file for Medicare. Even after you file for Medicare, you can continue to maintain the account and receive tax-free interest and dividends.<\/p>\n

Statistics show that most participants are not taking advantage of the attractive advantages associated with HSAs. Contributions are tax deductible. The earnings you receive are also tax-free as long as the withdrawals are used for qualified medical expenses. The contributions and earnings have the tax advantages for medical premiums as well as medical expenses. These tax advantages are allowable not only for your expenses but also for.your spouse, and for all of your dependents.<\/p>\n

Make the maximum contribution each year, as well as the catch-up contribution. After the year ends, you no longer can make contributions for the preceding years.<\/p>\n

You are not required to withdraw the funds from your account to pay for expenses made in the current year. So the account will continue to increase in value because of the deferred income from earnings and new contributions. There is no limit regarding the postponement of withdrawals.<\/p>\n

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As long as you only withdraw the funds from the account for qualified medical expenses, you will not be taxed on any of the contributions or earnings. However, there is a 10% penalty if you withdraw funds for non-medical expenses prior to age 65. There is no penalty for withdrawing funds after 65 for non-medical expenses, but the withdrawals will be taxable. You will only pay income taxes on withdrawals if you use the withdrawals for non-medical expenses.<\/p>\n

During retirement, you can use withdrawals to pay Medicare expenses not covered by Medicare, such as dental expenses, vision expenses, and hearing aids.<\/p>\n

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If you predecease your spouse, and name your spouse the beneficiary of the account, he\/she is still able to withdraw funds from the account tax-free as long as the funds are used to pay medical expenses. If there are any unpaid medical expenses you incurred prior to your death, your spouse can pay those expenses tax-free. In addition, any interest and dividends will continue to grow tax-free. Your spouse would only incur income taxes if the withdrawals were used for non-medical expenses.<\/p>\n

Advantage after age 73: HSA accounts have advantages that traditional IRAs and 401(k)accounts do not have. Even in retirement, there are no required yearly withdrawals from HSA accounts. After age 73, owners of traditional IRAs or 401(k) accounts are required to make withdrawals from retirement accounts based on the size of the account and the account holder\u2019s age, and all withdrawals are taxable at ordinary income tax rates. No such requirement is applicable for HSA accounts.<\/p>\n

Bottom line: If you are eligible to use a high-deductible HSA account, make the maximum yearly contribution and catch-up option if you are 55 or older. Pay ongoing medical expenses from other sources, and let your balances grow throughout retirement. Use the withdrawals only for qualified medical expenses and premiums. HSAs have tax advantages that are even more valuable than traditional IRAs and 401(k)s.\u00a0Name\u00a0your spouse as a beneficiary so he\/she can continue taking advantage of the continued tax benefits.<\/p>\n

Read more Pictures: Orange Mayor Jerry Demings\u2019 final State of the County address<\/a><\/p>\n

Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.<\/em><\/p>\n

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In previous articles, I have pointed out the several advantages of health savings accounts (HSAs). In a recent article, Forbes contributing writer\u00a0Bob Carlson\u00a0pointed out that by the end of 2026, it is expected that there will be approximately 44 million HSA accounts; at the end of 2022, there were approximately 35 million. 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