|Image Source: splatter.com|
“Even if we do everything we reasonably can to finance our retirement, sometimes we find ourselves less secure than we would have liked when retirement is close at hand,” says financial consultant and founder of Select Portfolio Management, Tony Amaradio. “Having a health savings account when we are young and contributing to it regularly could provide significant benefits if used as a part of a long term plan.”
|Image Source: altruistahealth.com|
Americans who are already enrolled in a high-deductible health plan might be eligible for a health savings account (HSA). The monies contributed to a HSA are not federally taxed when they are deposited, and can be rolled over. The funds can be used at any time for approved health-related costs without incurring a penalty (although non-prescription over the counter medications will not be considered eligible). However, it might be in the account holder’s best interest to allow the funds to accrue – if possible. The funds aren’t taxed; taxable income is reduced and withdrawals for approved health expenses aren’t taxed, either. Moreover, although there are penalties and taxes for using the funds for non-health purposes before retirement, after the age of 65, there are no penalties.
|Image Source: learnvest.com|
It is important to note, though, that contributions should begin at a relatively young age in order to achieve the optimal savings.
“After retirement, health costs are typically a large portion of the retirement savings financial obligation,” says Tony Amaradio. “Having a nest egg in the form of an HSA can alleviate some of the burden.”