This Smart Investing Move Can Help You Lower Your Tax Bill Now and in Retirement | Personal finance

How to start

If you want to contribute to an HSA, you must first make sure that you are eligible to do so. You must have a high deductible health insurance plan. It is one with a deductible of $ 1,400 or more for an individual or $ 2,800 or more for a family.

If you have a qualifying insurance plan, you can open an HSA with any provider you choose, but it may be worth checking to see if your employer offers one first. If your business does, consider using their account. You may be able to automatically post a percentage of each paycheck to your HSA, and a few companies even offer HSA matching.

Individuals can contribute up to $ 3,600 in 2021, while families can contribute up to $ 7,200. These limits will increase to $ 3,650 and $ 7,300 respectively for 2022. Keep in mind that these limits change over time as you may be able to put even more money into this account in the years to come.

It’s perfectly normal to use your HSA funds to cover some of your short-term medical expenses, but if you plan to store retirement funds here, it’s important to distinguish between your retirement and your medical savings. . Try to avoid spending your retirement savings if you can, so you don’t accidentally go wrong.

Given the low contribution limits of the HSA, you may need to link it with some of the other accounts mentioned above to save as much for retirement as you want. But that shouldn’t stop you from keeping some of your savings here if you have access to an HSA. No other account can match it in terms of flexibility, and its many benefits make it a valuable asset during your working and retirement years.

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