To say that staff who’re approaching retirement have lots on their minds is a dramatic understatement.

Within the years instantly earlier than retirement, staff who’re planning neatly must be serious about their monetary safety greater than ever. Their issues, nonetheless, are doubtless totally different from staff who’re many years away from leaving the workforce. Well being financial savings accounts are one kind of planning automobile that’s usually neglected in the course of the pre-retirement planning course of. 

Whereas most staff are conversant in the triple-tax advantages of the HSA choice, the problems which can be particular to older staff are sometimes ignored. A full understanding will help pre-retirees really feel extra assured as retirement nears — and may assist them keep away from costly errors when it comes time to enroll in Medicare.

Catching Up With HSAs

Purchasers most likely know that they’re entitled to make greater contributions to their retirement accounts as soon as they attain age 50. They may not know that they will make an extra $1,000-per-year contribution to their HSAs as soon as they hit age 55. That is above and past the $4,150 or $8,300 annual contribution limits that apply in 2024.

In fact, purchasers must also be reminded that there’s no have to spend down their HSA balances annually and that there’s no want to empty their HSA earlier than they retire or enroll in Medicare. 

HSA balances accumulate 12 months after 12 months, and so long as the house owners have certified medical bills, they will withdraw the funds tax-free in a future 12 months. Medicare premiums depend as medical bills for functions of the tax-free profit. 

As soon as they attain age 65, they will withdraw HSA funds for non-medical bills with out penalty. Any quantities withdrawn for non-medical causes, nonetheless, are topic to abnormal earnings taxes.