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We’re just a few weeks into the new year. For most Americans, a new year meant setting new financial goals. In fact, almost three-quarters of U.S. citizens had a New Year’s resolution last year that centered on being smarter with money. So how can you do just that? We broke down a few ways below, or watch this episode of our Benefits podcast to learn more about the perks of an HSA.
There is no “one-size-fits-all” guidance on how much you should be contributing to your HSA. With rising healthcare costs and cost of living, saving for retirement is more important than ever. Since all funds do carry over, you don’t risk losing funds at the end of the plan year, which is one reason why it makes sense to max out your HSA contributions in line with the IRS limits.
Our My HSA Planner tool can help you determine the right contribution amount based on your goals. It provides personalized calculations so you can learn more about your HSA’s present and future potential. Simply by entering basic information the My HSA Planner calculates your future savings balance, potential retirement balance, and projects how different levels of contributions can make an impact.
Setting goals that are achievable is vital to securing your dream retirement, but so is monitoring those savings goals. Always remember that your HSA contribution amount is flexible and can be changed at any time during the plan year.
At the 90-day mark, it’s clear whether you are making the right moves to meet your financial goals. It’s important to review your savings goals for the year one by one and to be honest with yourself on your progress.
Investing your HSA funds can enable your money to grow faster, tax-free, and help supplement your needs long-term while you save for retirement. However, the majority of people with active HSAs don’t take advantage of investing their money. In fact, only 6% of account holders were investing their HSA balance in 2020.
The expected rate of return on mutual fund investments is much higher than the standard interest rate of an HSA. For example, let’s say that you have $10,000 in your HSA balance and are trying to decide if you should invest your dollars.
Year | If you invest … | If you build interest … |
After five years | $14,693 | $10,176 |
After 10 years | $21,589 | $10,356 |
After 20 years | $46,609 | $10,724 |
* Table indicates fund growth at an 8 percent rate versus interest at a 0.035 percent rate.
The difference is considerable, and those invested funds are growing tax-free!
Many people dream of a certain retirement lifestyle. These goals are achievable, especially with the right planning. Many don’t realize that health savings accounts (HSAs) and 401(k)s can be used together as a retirement savings strategy. This pairing helps expand your savings potential over time.
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