What are the two biggest savings requirements of your working years? Health care and retirement. Though employers cover both of these in benefits packages, most people view them as separate expenditures — until, that is, they reach retirement and see how much health care costs affect their retirement standard of living.
That is changing with the emergence of health savings accounts (HSAs), a unique investment strategy that can help pay for the health care–related portion of retirement spending.
Three distinct features expand HSAs from accounts that fund short-term medical expenses into long-term investment vehicles:
If you are an employee in an HSA-eligible/high-deductible health insurance plan, you can save and invest your HSA assets — the employer and employee contributions — with any provider you choose, not just the one your employer offers. This may provide greater investment opportunity, especially if your employer only offers cash-based or low-return investments from their current HSA provider.
If you are an employer, you may not know that you can expand the range of available investments by de-coupling your HSA provider from your high-deductible health plan provider, who may be a health insurer that offers a less robust investment menu.
Here is a handy list of things to look for when choosing an HSA provider. Your financial professional can help you better understand and evaluate your options so you can make the best decision.
HSAs were set up as a way to manage exploding health care costs. As the HSA market grows, people are starting to realize they have more choices — and more opportunity — than they may think. That’s where a financial advisor can be crucial. An advisor can help employers optimize the investment mix in their HSA based on the demographics of the business, and help employees make investment decisions that may make the high cost of health care in retirement more manageable.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
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