National Retirement Security Week
National Retirement Security Week is held annually during the month of October. Its purpose is to raise awareness and help individuals to take the next steps toward a secure retirement. It also is a reminder for individuals to assess their retirement saving goals and take steps to ensure that they are on the right track to a financially secure retirement.
Security in retirement also means security in healthcare
Most people recognize the importance of saving for retirement, but it’s also critical to consider healthcare coverage when planning for a secure retirement. Healthcare is a large piece of the retirement security puzzle with healthcare costs significantly impacting not only financial stability, but also physical, emotional and mental wellbeing.
Health Savings Accounts (HSAs) offer a way to save for future healthcare costs with triple tax advantaged dollars. Through HSAs, employees deposit money into their HSAs, which is never subject to federal income taxes. Individuals withdraw funds from their HSAs to pay for eligible healthcare expenses tax free. Furthermore, HSAs allow individuals to withdraw money for non-healthcare expenses. The expense is only subject to income tax and not an additional penalty (1).
Individuals can withdraw from their HSAs at any time. However, employees who save their HSA money until retirement will have more of a financial benefit because the HSA money will have grown interest over time. According to Fidelity Retiree Healthcare Cost Estimate, in 2023 a retired couple age 65 will need to save $315,000 to cover retirement healthcare costs (2). With rising costs of healthcare, HSAs are a great tool to help ease financial burdens and help employees plan for a financially secure retirement, empowering them to enjoy a greater sense of wellbeing well into their golden years.
*WTW is not an accounting firm or a law firm and does not provide any legal, accounting or tax advice or opinions. All accounting information should be verified by your accountants, and you should consult your legal counsel and/or tax advisors with respect to any legal or tax questions.
Sources:
Speier, David, “HSAs vs. 401(k)s: Educating employees on how to maximize savings”, WTW, 22. Apr. 2021, https://www.wtwco.com/en-us/insights/2021/04/hsas-vs-401-k-s-educating-employees-on-how-to-maximize-savings
“What is an HSA, and how does it work?”, Fidelity, 2. Oct. 2023, https://www.fidelity.com/learning-center/smart-money/what-is-an-hsa