Fidelity is seeing more people contribute to both 401(k)s and health savings accounts, or HSAs. That slice of savers grew 21 percent between 2014 and 2016. Health savings accounts tend to accompany high-deductible health-care plans. For people with the cash flow to pay for health care out of pocket, money left to compound in the tax-deferred accounts can serve as stealth retirement savings, since an HSA is triple tax-free: You put pre-tax money into it , your gains compound tax-free, and you can withdraw from it without paying taxes as long as the withdrawals ares used for qualified medical expenses.
Thompson has seen people who retire at 62 or 63 using an HSA to help bridge the gap until they are eligible for Medicare at 65. With retiree medical expenses now at about $260,000 for a couple, according to Fidelity, every bit of savings helps.
This article was provided by Bloomberg News.