HSAs are the King of Retirement Funds
When paired with a high-deductible health plan, HSAs allow you to keep the “just in case” money that you would otherwise dish out to your insurance company through high premiums. But HSAs are not just an alternative to high-premium health plans, they are an unmatched retirement savings vehicle. Sure, 401(k)s and IRAs offer tax-free contributions and growth, but they don’t allow tax-free distributions. Roth IRAs offer tax-free growth and distributions but not tax-free contributions. On the other hand, FSAs do offer the triple-tax advantage for qualified medical expenses, but they are owned by your employer and have a “use-it-or-lose-it” policy. That is why HSAs are “king”—they offer tax-free contributions, growth, and distributions; they are owned by you; and they roll over from year to year (no “use-it-or-lose-it” policy). In addition to all these benefits, HSAs can be invested to promote even faster growth. Conveniently, MotivHealth provides in-house investment resources to help members prepare for the future.
Investing in your HSA is one of the smartest financial decisions you can make. HSA funds can be invested tax-free in mutual funds, stocks, or bonds. (Of course, it is always wise to set aside a set amount of HSA funds for short-term, unanticipated healthcare costs.) Investing in your HSA not only produces rapid growth, but better growth. When your money sits in a bank account you may receive 1 or 2% interest, but when you utilize the investment funds that, for example, MotivHealth grants access to, your savings can grow exponentially. The savings in your HSA roll over from year to year, which means if you utilize investment options they can accrue tax-free interest, adding even more savings to what you already save from tax benefits. HSAs remain intact even when you switch employers. And, unlike tax-deferred retirement plans—such as 401(k)s—HSAs do not require you to withdraw minimum distributions each year.
The Time Value of Money states that the money you have now is worth more than its identical sum in the future due to its current potential earning capacity. There’s no limit to how much your investments can grow. For example, if a family invested their maximum annual HSA contributions over 30 years at an average 7% annual rate of return, they could accumulate near $1 million in savings.
Everything You Need to Know About MHSA Investments
Now that it’s obvious you should invest your HSA, how exactly do you go about doing so?
For one, MotivHealth members can invest their HSAs in any of the funds at this link.
In order to qualify for investing at MotivHealth, you need to accumulate at least $2000 in your HSA. Once you reach that amount, you are free to invest anything over the $2000 balance.* Once you’ve invested, you don’t have to maintain a minimum balance of $2000 to keep your investments, but it is important to note that you won’t be able to make any new investments until you reach a $2000 balance once again.
Note that your investment balances cannot cover claim payments or purchases with your MotivHealth HSA debit card. To use investment funds for such payments, you will first need to sell your investments.
Time Is Money
What are you waiting for? Start investing your HSA today, and you’ll be sure to thank yourself when retirement arrives. After age 65, HSA funds can finally be used for non-medical expenses.** It really seems silly not to invest an account that allows tax-free growth, don’t you think?
* Participating in MotivHealth investments deducts a monthly fee of $3.95 from your HSA balance, and these investments are not FDIC insured.
** HSA funds used on non-medical expenses after age 65 are subject to income tax.
“5 Ways HSAs Can Fortify Your Retirement”
“FSA: What Is It, and Should I Get One?”
“Health Savings Account (HSA) vs. 401k”
“Time Value of Money”