The HSA is Going to Get a Lot More Attractive in 2022
Everyone knows that taking advantage of a 401(k) savings plan if you have one is crucial when saving for retirement, but saving in more than just a 401(k) can also be beneficial.
Enter the Health Saving Account (HSA).
An HSA is a savings plan that allows you to save specifically for current and future medical costs on a tax-advantages basis. The best perk of having an HSA is that, unlike having a FSA (Flexible Spending Account) there is no need to spend all of the funds that you’ve saved for the year as they never expire.
Why Save Through an HSA?
Simply put, an HSA is a win-win-win on a tax basis.
Contributions are made tax-free, investment growth is tax-free, and withdrawals are tax-free as long as you use them to pay for qualified medical expenses.
What's Changing?
HSAs have been a great tool for savers and tax planners for years, but they're getting better with the limits rising $50 for individual coverage and $100 for families. The new limits starting in 2022 are:
$3,650 if you're saving on your own behalf and are under 55
$4,650 if you're saving on your own behalf and are 55 or over
$7,300 if you're saving at the family level and are under 55
$8,300 if you're saving at the family level and are 55 or over
Max it Out and Take it With You:
The truth is, you medical spending will likely increase in retirement, both as you age and as the cost of healthcare continues to rise.
An HSA that you contribute to while you are working is a great way to fund these expenses later in life, while enjoying tax benefits along the way.