Have an HSA? Here's Why You Should Be Investing in It | Personal Finance

September 7, 2021

Investing your HSA contributions in ETFs and other equity funds maximizes the account's triple tax benefit. You should earn more over time and, ultimately, have more funds available to withdraw tax-free in retirement.

3. Your HSA can back up your 401(k) or IRA

Earmarking funds for future healthcare costs protects you against the downside scenario -- that you'll require expensive medications or treatments in your senior years. But what if you age in great health and keep yourself out of the doctor's office? The HSA has an answer for that situation, too.

Once you reach 65, you can take non-medical HSA withdrawals without penalty. These withdrawals will be taxed as ordinary income, just like a qualified 401(k) or IRA distribution. That means there's no way to overfund your HSA. If you are healthy as can be, you can use the money to cover your normal retirement living expenses.

Invest your HSA funds for retirement readiness