Health Savings Account (HSA) in Retirement:
A Health Savings Account (HSA) in retirement is a tax-advantaged savings account designed to help individuals save for medical expenses incurred during retirement. Contributions to an HSA are made pre-tax, reducing taxable income, and the funds can be withdrawn tax-free when used for qualified medical expenses.
During retirement, individuals can utilize their HSA funds for various healthcare costs, including deductibles, copayments, and other qualified expenses, without incurring taxes. Additionally, HSAs offer the potential for growth through investment, making them a valuable tool in retirement planning to cover healthcare costs, which can be significant as individuals age.
For example, if a retiree has $50,000 in their HSA, they can withdraw funds for eligible medical expenses without being taxed, whereas other retirement accounts, like traditional IRAs, may be subject to income tax upon withdrawal.
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