Life got really expensive for a lot of people in 2022. We can thank inflation for that.
As a result, many people had to cut back on different things. Some had to stop making contributions toward their nest eggs and pull the plug on funding an IRA or 401(k). Others had to cut back on leisure spending. And many Americans had to put off medical care due to the cost involved.
What’s disturbing, though, is that 13% of Americans aged 65 and older delayed medical care due to cost, as per a recent Gallup poll. And seeing as how older people are more likely to have health issues than younger ones, delaying care could, in many cases, be both physically and financially catastrophic.
Of course, it’s easy to see why so many seniors couldn’t afford to spend money on healthcare in 2022. Social Security failed to keep up with inflation last year, forcing many retirees on a fixed income to slash spending across the board. And because the stock market did poorly, some seniors may have been nervous to tap their investments for healthcare spending purposes.
If you want to avoid a scenario where you’re forced to delay healthcare as a senior, your best bet is to save extra money during your working years for the express purpose of covering medical bills. And there’s one specific account it pays to look at in that regard.
Take advantage of an HSA
A health savings account (HSA) lets you contribute funds for near- and long-term healthcare needs. Unlike flexible spending accounts, HSA funds never expire. You don’t need to spend down your plan balance year after year. Instead, you can invest money you don’t need right away and grow it on a tax-free basis. HSA withdrawals are also tax-free when used for qualifying healthcare expenses.
Now, not everyone can fund an HSA. Rather, your health insurance plan needs to be compatible, and the rules change every year. This year, for instance, your plan needs to meet these criteria:
- Have a minimum $1,500 deductible for individual coverage or a minimum $3,000 deductible for family coverage
- Have an out-of-pocket maximum of $7,500 for individual coverage or $15,000 for family coverage
But if your plan qualifies, it pays to pump money into an HSA, invest it, and let it grow into a larger sum for retirement. You can contribute up to $3,850 this year as an individual or up to $7,750 at the family level. And if you’re 55 or older, you can add another $1,000 to whichever limit applies to you, the same way savers 50 and over can make catch-up contributions to an IRA or 401(k) plan.
An opportunity you don’t want to pass up
Healthcare might end up being your single greatest expense in retirement. And you don’t want to land in a position where you’re forced to delay medical care due to the cost involved. Funding an HSA during your working years could help you avoid that unwanted scenario — and help ensure that money doesn’t have to get in the way of preserving your health.
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