Big news for couples aged 55 and above! Health Savings Accounts (HSAs) just got more attractive thanks to the IRS’s latest guidelines. Starting next year, older U.S. couples can channel more than $10,000 annually into these tax-free treasure troves for medical expenses.
Here’s the breakdown: Individuals can now contribute up to $4,150 to an HSA each year, marking a 7.8% increase. Families get an even bigger pie with the ability to set aside up to $8,300, up by 7.1%, as per the new rules.
But wait, there’s more! Individuals and couples who are 55 and older, and not yet enrolled in Medicare, can contribute even more. We’re talking $5,150 for individuals and a whopping $10,300 for couples, each year. This includes the $1,000 “catch-up” contribution that’s already in play for this age group.
Kevin Robertson, a senior vice president and chief revenue officer at HSA Bank, wasn’t surprised by the substantial cost-of-living adjustment, given the rising tide of inflation. However, he points out an intriguing psychological edge: the hefty figures like $10,000 for couples and $5,000 for individuals are bound to turn heads. It’s a psychological milestone that could make more people sit up and consider contributing to an HSA.
HSAs are not just a tax haven; they’re a smart strategy for growing and safeguarding money for medical expenses. As the Society for Human Resource Management aptly notes, these accounts enjoy a triple tax advantage: contributions are pretax, the money grows tax-free, and withdrawals for qualified medical expenses don’t attract taxes.
Take this for inspiration: The average HSA that kicked off in 2005 has now blossomed to over $50,000 in investments and deposits, as per data from Devenir, an independent HSA industry advisor. That’s a significant chunk of the estimated $315,000 that retirees are expected to spend on medical expenses, according to Fidelity’s Retiree Health Care Cost Estimate.
Despite these encouraging numbers, Robertson points out that the vast majority aren’t maxing out their contributions. The new contribution limits offer a golden opportunity for people to reassess their needs and get more involved in their financial health planning. It’s a proactive step towards a more secure and worry-free retirement.
