However, for people still in their working years there is one retirement savings vehicle we highlighted in a previous blog.

Health Savings Accounts are Triple tax-free

Health Savings Accounts (HSA)s are offered to any individual covered by a high deductible health plan (HDHP).

• HSA contributions are made pre-tax, similar to a 401k contribution. Contribution limits are $3,450 for individuals or $6,900 for families.
• You can invest the contributions into a variety of investments offered within the plan. Just like a 401k different HSAs will offer different investment options.
• When you use distributions for qualified medical expenses, the distributions are tax-free. The includible expense list is very extensive but includes many big-ticket items such as long-term care insurance premiums, Medicare part B and part D.

Do you already have an HSA?

According to a 2017 survey by the Employee Benefits Research Institute, just 4% of all health savings accounts were invested in anything other than cash. That means 96% of people who currently have HSAs are missing a great opportunity. It is impossible to leverage the tax-deferred and tax-free benefits if the investments do not have time to grow tax-preferred in the first place.

Is an HSA right for me?

Anyone who plans on one day retiring should consider an HSA. If you are generally in good health and have minimal annual health care costs HSAs are the most powerful retirement savings tool available. The key to maximizing the benefit is to maximize the annual contribution, invest the funds within the plan and pay actual medical expenses out of pocket.

The HSA offers investors a unique opportunity to address one of the largest expenses in retirement in their earning years. This is one of the most overlooked, yet most powerful tools for people in their earning years as they look ahead to retirement. This time of year most employers are doing their annual benefits enrollment, which means now is the time to see if you can access an HSA and start using the best retirement savings tool available!

Pro-tip: If you are already maxing out your 401k and IRA, the HSA offers another way to stash cash for retirement!