Investing your Health Savings Account (HSA) allows your funds to grow tax-free, helping you bridge the gap between your savings and rising healthcare costs in retirement. Unlike a 401(k), an HSA offers triple tax benefits and no required minimum distributions — making it one of the most powerful tools for long-term savings.

How much will healthcare cost in retirement?

Healthcare costs are one of the biggest expenses retirees face. According to experts estimate, a 65-year-old couple retiring today can expect to spend over $315,000 on healthcare throughout retirement.

And remember, Medicare isn't free. You'll still need to cover premiums, deductibles, copays, and services that Medicare doesn't cover — like dental, vision, and hearing.

That's why more Americans are investing in their HSA to prepare for these costs.

HSA vs. 401(k): Which is better for retirement savings?

A 401(k) is a great retirement savings tool, but an HSA has unique advantages that make it an even better option for healthcare expenses.

With an HSA, you get triple tax benefits: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free. A 401(k) only offers tax-deferred contributions — you'll pay income tax on every withdrawal in retirement.

HSAs also have no required minimum distributions, meaning you can let your money grow for as long as you want. After age 65, you can use HSA funds for any purpose — not just medical expenses — without penalty (though non-medical withdrawals are taxed as income, similar to a 401(k)).

Join us for a webinar about saving for retirement with your HSA.

Maximize your spending power in retirement

When you invest your HSA funds, you give them the potential to grow significantly over time through the power of compound interest.

Use your HSA to pay for qualified medical expenses tax-free in retirement. From prescriptions to dental work to qualified medical expenses you might not expect — your HSA gives you spending power.

You can even use your HSA at the HSA Store to shop for eligible items.

What is the best strategy for investing your HSA?

Here's a simple 4-step strategy to maximize your HSA and retirement savings. Check this page for current IRS contribution limits.

1. Max out your employer's HSA match

If your employer offers an HSA match, always contribute enough to get the full match. It's essentially free money that goes straight into your tax-advantaged HSA.

2. Max out your employer's 401(k) match

After maxing your HSA match, contribute enough to your employer 401(k) to get the full company match.

3. Max out your HSA

Contribute up to the IRS contribution limits. Your HSA offers triple tax benefits that no 401(k) can match, making it the better next step.

4. Max out your 401(k)

Maxing contributions to your 401(k) gives you additional tax-deferred growth. Just remember the 401(k) early distribution penalty if you withdraw before age 59½.

Frequently Asked Questions

Have questions about investing your HSA? Visit our Help Center for answers to common questions, or browse eligible items at the HSA Store or Amazon.