In contrast, traditional and Roth accounts That is offer tax-free contributions or withdrawals, but not both.
Of course, you might be wondering what happens if you not withdraw money for eligible health care expenses. As long as you are 65 or older, you will not be penalized on the withdrawal. However, you will be taxed at your regular rate. In other words, the account will be taxed fundamentally the same as a 401 (k).
2. Health care is one of the biggest expenses that older people face
There is another very good reason to invest in an HSA for your retirement years. Chances are, you’ll need a lot of money to cover medical services, and an HSA can provide that.
A recent Fidelity study found that an elderly opposite-sex couple retiring this year at age 65 would spend around $ 300,000 on medical bills during their retirement. These are expenses for things like prescription drug costs and health insurance premiums.
Finding enough money for all the care you need can be difficult. But, if you’ve spent your career investing in an HSA in the years you were eligible, you should have a big pot of money aside that’s set aside for medical purposes. This can ensure that you can afford the care you need without draining your nest egg dry.