Many Seniors Overlook This Unique Retirement Option

senior without an hsa
Photo by Drazen Zigic / Shutterstock.com

A health savings account is one of the best ways to shore up finances during your golden years. Yet, just a tiny percentage of seniors make use of these accounts.

A mere 8% of people in their 60s and 4% of those in their 70s currently have HSAs, according to a recent survey by TD Ameritrade.

The numbers aren’t much better for folks approaching their senior years. A scanty 16% of people in their 40s and 15% in their 50s have HSAs, according to the survey.

Why is this a big deal? Notably, it’s because HSAs offer advantages that are unique among retirement savings accounts.

Why you need an HSA

Yes, it’s true that HSAs are not strictly “retirement accounts.” In fact, HSAs can be used by savers across the age spectrum, provided they qualify for one. (The main requirement to qualify is that you are covered by a high-deductible health insurance plan.)

But as we point out in “5 Reasons to Use a Health Savings Account as a Retirement Fund,” savvy savers can use HSAs to supercharge their retirement savings.

For starters, HSA offer triple tax advantages:

  • You get a tax deduction for each tax year for which you contribute money to an HSA.
  • The money grows tax-free.
  • You get to withdraw the money tax-free, provided that you use it for qualified health expenses.

As we noted in the story, this makes HSAs unique:

“In essence, if you use HSA money to pay for health care expenses, it’s never taxed. Never. It’s tough to think of any other savings vehicle that offers such a powerful combination of tax incentives.”

Since health care expenses often are a major burden during retirement, HSAs can be a godsend, possibly helping you to save tens of thousands of dollars — or more — on health costs during your golden years.

And even if you luck out and remain healthy during retirement, an HSA can be a boon. One overlooked way to use one is as a sort of alternative IRA. Again, from our story:

“Once you reach the age of 65, you can withdraw your HSA funds for any reason. Just as with a traditional IRA, you will pay income taxes on the withdrawal at that point. However, you will not pay any penalties.”

Is your curiosity piqued? Then read more about HSAs in “3 Great Reasons to Set Up a Health Savings Account.”

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
How Much of My Social Security Benefit Can My Ex Take From Me?
How Much of My Social Security Benefit Can My Ex Take From Me?

A man wonders if his ex-wife will siphon away his Social Security benefit.

7 Surprising Benefits of Staying Fit in Retirement
7 Surprising Benefits of Staying Fit in Retirement

Improving your overall physical health is just one reason to stay active after 50.

How to Save Up to 70% on 7 Everyday Purchases
How to Save Up to 70% on 7 Everyday Purchases

Stop getting sucked into paying a premium when good alternatives are available at huge savings.

The 5 Worst Home Upgrades for the Money
The 5 Worst Home Upgrades for the Money

These home improvement projects basically never pay off.

Marooned at Home? Earn Some Cash Playing on Your Computer
Marooned at Home? Earn Some Cash Playing on Your Computer

Earn cash by reading emails, taking surveys, playing games, shopping and signing up for offers through this website.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Whether you resell it for a big profit or add it to your own wardrobe, this type of clothing is a hidden steal.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

These 10 Postal Price Hikes Start Next Week
These 10 Postal Price Hikes Start Next Week

Starting on Jan. 24, the price of various mail and shipping services will rise.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

Prepare to Pay More for These 31 Drugs in 2021
Prepare to Pay More for These 31 Drugs in 2021

More than 700 prescription medications have seen price hikes so far this year. Here’s a look at the worst.

5 States Lowering Taxes This Year and 2 Raising Them
5 States Lowering Taxes This Year and 2 Raising Them

State personal income tax rates, brackets and deductions just changed in these places.

The 10 Golden Rules of Becoming a Millionaire
The 10 Golden Rules of Becoming a Millionaire

I’m a millionaire several times over. I got here the same way you can — by following these simple steps.

7 Tricks to Cleaning Your Bathroom Faster
7 Tricks to Cleaning Your Bathroom Faster

These tips can get your bathroom sparkling with little time and no elbow grease.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.