The Best Retirement Account You Never Heard Of Before?

Media / Blog

The Best Retirement Account You Never Heard Of Before?

Prev

What Happens To My Frequent Flyer Points When I Die?

March 12, 2017

When it comes to retirement accounts, everyone wants to have the ultimate Swiss Army Knife.   Wouldn’t it be great to have an investment that you can put away pre-tax, grows tax-deferred, and then ultimately comes out tax-free?    Well, that strategy actually exists today and it is called a Health Savings Account.   Typically Health Savings Accounts are tied to High Deductible Health Plans and allow you to put away money in the triple tax-advantaged strategy.  But… how in the world does a health related account factor into your retirement?

What I have noticed as of late is that more people are considering retirement before the age of 65.  In many cases, the ‘work optional’ strategy starts to materialize for many couples in their late 50’s or early 60’s.   The challenge of making an early retirement decision isn’t always about how much money you have saved for retirement, but dealing with healthcare related issues before you turn the age of 65 and qualify for Medicare can be a significant planning challenge.  Even if you can COBRA your health insurance for 18 months after you separate from service from your employer, you may still be left with a gaping hole in your financial plan in the event that you have health matters that chew into your retirement capital.

For 2017, an individual can save $3,400 a year pre-tax and a family can save $6,750 pre-tax.  If you are the age of 55 or older here in 2017, than you can save an additional $1,000 to your HSA account.   You can open an HSA account through a bank, an insurance company, or another IRS approved trustee.  Generally, if your balance in the HSA is more than $2,000, most trustees will have options to invest your HSA in a very similar fashion to how you can invest your 401k plan.   Remember, because HSA plans are NOT use or lose, these are very portable investment accounts that come with you no matter where your place of employment is located.  Monies will continue to grow tax-deferred until you use them at which point they will come out tax-free.

One side note for people considering an HSA.  If you are strapped for cash, you have a one-time opportunity in one tax year to roll money from an IRA into an HSA.  The dollars from the IRA must still stay within the annual contribution limits, but if you have plenty saved in IRA accounts this could be a smart alternative strategy.

If you are struggling with how to handle these as you plan for retirement, give me a call or shoot me an e-mail at [email protected] and we can help.

Next

Want To Get Wealthy? Try A Budget Cleanse!

Sign Up

Sign up for our exclusive Sunday Paper with a weekly market commentary, insightful personal finance blogs, and life changing education guides.

Email sign up

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

This site is published for residents of the United States only. Registered Representatives of Kestra IS and Investment Advisor Representatives of Kestra AS may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed. Not all products and services referenced on this site are available in every state and through every representative or advisor listed. For additional information, please contact Kestra IS Compliance Department at 844-553-7872.

PLEASE NOTE: The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. Kestra IS and Kestra AS makes no representation as to the completeness or accuracy of information provided at these web sites. Nor is Kestra IS and Kestra AS liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, web sites, information and programs made available through this web site. When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.