Welcome back to Powering Your Retirement Radio. I am your host Dan Leonard. I am back from Charles Schwab’s Nation conference in Denver last week. It was a great week, and I learned a lot.
For instance, Health Savings Accounts (HSA) are great for saving for future medical expenses. This isn’t news to most people, but one thing I learned that I should have known was if you have an expense this year and you don’t use it, you don’t lose it. So, you can accumulate receipts and years you are covered by a High Deductible Health Plan (HDHP).
Meaning if you can afford to pay your expenses now, you can save money that will grow TRIPLE tax-free. You can collect on your prior expenses in the future after your money has grown tax-free and not have to pay tax on that money ever.
Today I am going to cover five basics.
2) Tax Treatment
The average married couple will spend approximately $361,000 for health care in retirement. At today’s tax rates, if you were in the 24% Federal Tax Bracket and in California’s 9.3% State Tax bracket. Not paying tax on those distributions could save you $180,229.38 in tax if you were to pull the money from a retirement account to pay those expenses.