You know healthcare costs are increasing, but are you putting away enough to cover medical bills totaling six figures?
According to a recent Forbes article
, about half the participants in a recent retirement survey said they’re expecting to pay about $50,000 in healthcare costs during retirement. That study also estimated that the average retiree couple will actually need $220,000 for out-of-pocket medical-related costs – significantly more than savers predict. That doesn’t even include long-term care or dental coverage.
The author details an option to help couples prepare for the costs: a Health Savings Account (HSA). The HSA has a couple of benefits, author Nancy Anderson says:
“An HSA is the only account I know of that gives you a tax break today (your contributions are pre-tax through payroll deductions), as well as a tax break when you take the funds out (withdrawals for qualified medical expenses are tax-free).”
Unlike Flexible Spending accounts, you don’t have to use all the funds in the account by the end of each year – they roll over to the next year as long as you have the account. The maximum contribution for an HSA is $3,300 for an individual and $6,550 for a family. Those who are 55 and older can contribute an additional $1,000 each year.
See this guide
for more details on how HSAs help you save for healthcare costs tax-free.