Health savings accounts (HSAs) are projected to surpass $100 billion in assets in 2023, showing that consumers are realizing the potential power of HSAs, including as a significant wealth-building tool (there were nearly 34 million accounts in June 2022, according to research by HSA investment company Devenir). The fact that the HSA individual contribution limit is lower than that for deductible contributions to an individual retirement account (IRA) has led to HSAs often being overlooked in financial planning.
However, when best practices are used over the decades of a typical working person’s career, a sizable balance can be accumulated. Pair that with health care expenses as the biggest unknown in most retirees’ financial plans, and having a pot of tax-free money set aside specifically to cover those expenses can make tax and withdrawal planning in retirement much simpler. Learn more