Invest
Your Wealth into Your Health (Savings Account)
Amidst the bustling tax season, you may find yourself
already envisioning the dollars going back into your pocket. According to the
IRS, roughly two-thirds of Americans receive a tax return. While the
traditional practice of building a "nest egg" or lump sum, was popular for Baby
Boomers, there is another strategic way to use these funds that also have
tax-advantages.
As Millennials and Gen Z'ers are navigating the effects of
high inflation, the fluctuating housing market, and overall increased cost of
living, they also are shown to contribute the most to their Health Savings
Accounts, (HSA) according to a participant study by Charles Schwab.
An HSA is a distinct savings account designed to help people
with high-deductible health plans save for medical expenses. It offers a unique
combination of benefits that make it an effective financial tool. Contributions
to an HSA are tax-deductible, the money grows tax-free, and withdrawals for
qualified medical expenses are also tax-free. A triple win!
While it's easy to let the excitement of a tax refund lead
you to spend it impulsively, redirecting that money into an HSA is a
cost-effective way to create longevity in paying for future health expenses. If
you are in your 20s or 30s, this is an ideal time to invest in your HSA. Though
medical needs are often unpredictable, growing this account while you are young
helps prepare you for the increased health risk as you age. You won't regret
having an HSA when unexpected medical bills come your way, and the tax benefits
and long-term growth make it an even more appealing option for your money.
If you are older and have untouched funds in your HSA, you
can apply that money toward non-medical expenses once you turn 65. While you'll
pay income tax on those withdrawals, you won't be penalized with the extra 20% tax
that applies to non-medical withdrawals made before age 65.
This means your HSA can serve as a backup retirement fund,
which makes it even more valuable when thinking about your future!
At Telhio Credit Union we are committed to providing our
members with the tools and resources needed to make informed financial
decisions for themselves and their families, so their money is managed with
efficiency and confidence. Right now, Telhio members can earn up to 1.00% APY
on an HSA account. Stop by a branch to open an account or to get more
information.
