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Plan for future healthcare costs as much as possible.

You may not think your health savings account, or HSA, can do much for you once you retire. Good news: It absolutely can!  In an article titled “Why your next dollar shouldn’t go to your 401(k)” (July 2015), CNN explained how you may be able to use your HSA to help pay for medical expenses once you transition into retirement.

An HSA’s purpose is to help you save for out-of-pocket medical expenses if you have a high-deductible health plan. The money isn’t taxed when it goes in or when you take it out, as long as it’s used for medical expenses. You can use the money now, while you’re working, or at any time in the future regardless of age, without penalty. HSA money can also be invested and grown, just like money in a 401(k). If you’re going to use this strategy, though, be sure to keep enough cash in your account to cover any medical expenses you may be responsible for throughout the year. Also, make sure you continue to contribute enough to your 401(k) to get the full employer match if it’s offered.

Planning ahead for medical expenses during retirement is an important process; saving through an HSA is just one possible step. A recent CNBC article (“Don’t let health-care expenses derail your retirement,” October 2015) listed some things to consider when making arrangements for healthcare costs to come:

  • Review your current needs to help predict your future ones. Are you managing a chronic condition? Do you tend to see your doctor often? Are you taking steps to remain healthy as you age?


  • Estimate what you might spend. AARP has a helpful healthcare costs calculator. Survey your income sources to get a clearer picture of how much you’ll have to work with, keeping in mind that the amount you spend on medical costs will likely increase as you age.


  • Look into private insurance, or Medicare Advantage Plans. These plans generally cover more claims and prescriptions than traditional Medicare, which could save you money throughout retirement.