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.
Key facts about retirement security
Retirement savings gap. In a recent nationwide survey conducted by the National Institue on Retirement Security (NIRS) 55% of Americans are concerned that they cannot achieve financial security in retirement (1).
There are many ways to save for retirement. One of the most common methods of saving for retirement is through an employer-sponsored 401(k), where employees can invest pre-tax dollars, often with the benefit of their employer’s matching contributions. Another way to save is an Individual Retirement Account (IRAs) allowing tax-deferred or tax-free growth depending on the type (traditional or Roth) (2). Additionally, contributing to a Health Savings Account (HSA) offers a way to save for future medical expenses with tax advantages.
Increased longevity. People are living longer than ever before, with the current life expectancy for the United States in 2024 up 0.18% from 2023 at 79.25 years (3). While this is great news for quality of life, it also means retirement savings must last longer.
Rising healthcare costs. Healthcare is one of the biggest expenses retirees face. The average couple retiring today will need approximately $315,00 to cover healthcare expenses during retirement (4).
It's never too late to start saving for retirement. Every contribution, no matter how small or late, can make a significant difference over time. By taking proactive steps today, whether it’s saving more, adjust lifestyle or spending habits, or investing wisely, individuals can still make strides towards a more comfortable and 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 HSA to pay for eligible healthcare expenses tax-free. Furthermore, HSAs allow individuals who are 65 or older to withdraw money for non-healthcare expenses. The expense is only subject to income tax and not an additional penalty (5).
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. 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:
Kenneally, Kelly, “Retirement Insecurity 2024: Americans’ Views of Retirement”, National Institue on Retirement Security, Feb. 2024, https://www.nirsonline.org/reports/retirementinsecurity2024/
Tretina, Kat, “How To Save For Retirement”, Forbes, 18. Apr. 2023, https://www.forbes.com/advisor/retirement/how-to-save-for-retirement/
“U.S. Life Expectancy 1950-2024" Macrotrends, https://www.macrotrends.net/global-metrics/countries/USA/united-states/life-expectancy
“Keys to covering health care in retirement”, Fidelity, https://www.fidelity.com/learning-center/wealth-management-insights/how-to-prepare-for-health-care-costs-in-retirement
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