The HSA: America's Most Powerful Retirement Account
Everyone talks about 401(k)s and IRAs. But the Health Savings Account might be the most tax-advantaged account in America—if you use it right. Here's the strategy most people miss.
The Triple Tax Advantage
The HSA is the only account in America with three tax benefits:
The HSA Triple Play
- Tax-deductible contributions (like a traditional 401k)
- Tax-free growth (like a Roth)
- Tax-free withdrawals for qualified medical expenses
No other account gives you all three. It's a Roth that also gives you a deduction going in.
The "Stealth IRA" Strategy
Most people use their HSA like a checking account—contribute money, spend it on this year's medical bills. That works, but it's leaving money on the table.
The power move: Never spend from your HSA. Let it grow for decades.
Here's how:
- Max out your HSA every year ($4,150 individual / $8,300 family in 2024)
- Pay current medical expenses out of pocket
- Keep receipts for every medical expense (forever)
- Invest your HSA in index funds, not cash
- Let it compound for 20-30 years
- In retirement, reimburse yourself for decades of saved receipts—tax-free
The receipt hack: There's no time limit on reimbursement. You can pay $500 out of pocket for dental work today, save the receipt, and withdraw $500 tax-free from your HSA in 30 years. Meanwhile, that $500 has been growing tax-free.
HSA vs Other Accounts
Traditional 401(k)
✓ Tax deduction
✓ Tax-free growth
✗ Taxed on withdrawal
Roth IRA
✗ No deduction
✓ Tax-free growth
✓ Tax-free withdrawal
HSA
✓ Tax deduction
✓ Tax-free growth
✓ Tax-free withdrawal*
*For qualified medical expenses. After 65, non-medical withdrawals are taxed like a traditional IRA.
The Numbers Over Time
Let's say you max out a family HSA ($8,300/year) from age 35 to 65, earning 7% annually.
After 30 years: approximately $830,000
If you've accumulated $200,000 in medical receipts over those 30 years (doctor visits, prescriptions, dental, vision, etc.), you can withdraw $200,000 completely tax-free. The rest can be used for future medical expenses—which, statistically, you'll have plenty of in retirement.
The Catch: You Need an HDHP
To contribute to an HSA, you must have a High Deductible Health Plan (HDHP). For 2024:
- Minimum deductible: $1,600 individual / $3,200 family
- Maximum out-of-pocket: $8,050 individual / $16,100 family
HDHPs aren't for everyone. If you have significant ongoing medical expenses, a traditional plan with lower deductibles might cost less overall. But for relatively healthy people who can afford the higher deductible, the HSA benefits often outweigh the insurance trade-off.
After 65: It Becomes an IRA
Once you turn 65, the rules change:
- Medical withdrawals are still tax-free
- Non-medical withdrawals are taxed as ordinary income (no penalty)
This means worst case, your HSA becomes a traditional IRA. Best case, you use it for the substantial medical expenses most people face in retirement—all tax-free.
How Talk Through Wealth Helps
Model how the HSA fits into your overall retirement picture:
- Project HSA growth over your working years
- Estimate future medical expenses in retirement
- Optimize withdrawal sequencing: HSA vs 401(k) vs Roth
- See the tax savings compared to using other accounts
Model Your HSA Strategy
Join the waitlist to see how HSA fits your retirement plan.
Join the Waitlist