Reduce Your Stress By Opening A Health Savings Account

Healthcare. This may be one of the most stressful words in the English language today. Especially when you think about the cost of Healthcare in retirement.

For instance, Fidelity estimates that an average 65 year old couple retiring today will need to set aside $280,000 to cover healthcare related expenses in retirement, excluding long term care costs. Put another way they estimate that same couple will spend $11,000 on healthcare related expenses their first year in retirement. So how should one save for those expenses? The answer… a Health Savings Account.

Health. Savings. Account.

Those three words can help reduce the stress of retirement healthcare expenses. A Health Savings Account, or HSA, is a tax-advantaged account that can be opened by anyone who is enrolled in a high deductible health plan (with a deductible of at least $1,350 for individuals or $2,700 for families for 2018). Typically, HSAs offer three significant tax benefits:

1.      Tax-free withdrawals. If you use HSA savings to pay qualified medical expenses, the withdrawals are income tax free.