This Dating App Could Find You a Match — With Great Credit
It's important to find someone who's a great match for your personality. Should you also focus on finding a great financial match? Read on to learn more.
Debt is bad news at any stage of life. But in retirement, it can be particularly problematic.
Many retirees end up on a fixed income that’s largely limited to Social Security. And in that financial scenario, the last thing you’d want is a series of nagging debt payments hanging over your head.
But recent data from NiceRx reveals that seniors aged 65 to 69 have an average of $12,030 in medical debt, while those aged 70 to 74 have an average of $13,080. Worse yet, seniors 75 and over have an average medical debt load of $17,510.
Image source: Getty Images.
A big reason seniors wind up with medical debt is that health issues arise as they age, and Medicare often leaves patients with a host of bills to cover on their own. But if you’re eager to avoid a scenario where you end up with a massive pile of medical debt later in life, then there’s one specific type of account worth saving in during your working years.
Set yourself up to cover your future healthcare costs with ease
If you’re enrolled in a high-deductible health insurance plan, you may be eligible to participate in a health savings account, or HSA. And it pays to take advantage of that option for several reasons.
First, HSAs are triple tax-advantaged, which means you get a host of benefits. HSA contributions go in tax-free, and funds that aren’t withdrawn immediately can be invested and grown tax-free. Withdrawals are then tax-free provided they’re used to pay for qualified healthcare expenses, such as prescription refills, doctor visit copays, and Medicare premiums.
Secondly, HSA funds are yours to access whenever you want. You can fund an HSA in your 20s and 30s, leave that money alone for decades, and start dipping in during your 60s.
In fact, that’s actually the best way to make the most of an HSA — to contribute funds early in life and then let them grow into a larger sum over time. (Some people confuse HSAs with FSAs, or flexible spending accounts, in this regard. But while FSAs make you use up your money every year or otherwise risk forfeiting it, HSAs let you invest unused money and carry it forward.)
Finally, HSAs are extremely flexible. Prior to age 65, you’ll be penalized if you take an HSA withdrawal for nonmedical purposes. But once you reach 65, you can take an HSA withdrawal for non-healthcare expenses and avoid a penalty. In that scenario, the worst that happens is that your withdrawal gets taxed, the same way you’d be taxed for tapping a traditional IRA or 401(k) plan during retirement.
Don’t risk medical debt
Medical debt can be a very frustrating kind to rack up because it’s largely unavoidable. If you want to lessen your chances of landing in medical debt due to later-in-life health-related bills, then pump money into an HSA while you can. That way, you’ll have a dedicated source of funds you can earmark for medical spending — and you can also avoid a world of stress.
The $18,984 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.
