Did you know that a Health Savings Account (HSA) can help you prepare for retirement? HSAs were originally designed to help participants cover out-of-pocket medical expenses and allow them to save for future costs, all while saving tax. They also were meant to be a way for a participant to have an account that was their own—regardless of where they worked. A renewed focus on the tax advantages they provide have inspired a new wave of people to use HSAs for retirement. After age 65, participants can begin to use their HSAs to help with various retirement needs.
Below are a few examples of how an HSA can be put to good use.
Health Expenses
As you grow older, you may face increasing healthcare expenses. Your HSA can be used as a savings vehicle to help offset eligible healthcare expenses after retirement. If you elect Medicare coverage after you turn 65, you may no longer contribute to your HSA, but you can still use your HSA to pay for eligible healthcare expenses.
Savings Account
One benefit to your HSA is that it can be treated as a savings account. Unlike a Healthcare Flexible Spending Account, your funds don’t expire at the end of your plan year and can roll over each year. If you withdraw funds before age 65 for non-eligible expenses, you are required to pay a penalty and state and federal tax on those withdrawals. After age 65, you will be able to withdraw funds for non-medical purposes penalty-free, but you will still be expected to pay state and federal tax. You may still use your HSA for eligible medical expenses tax-free after you turn 65.
Investing Your HSA
If you have accumulated a sufficient balance in your HSA to cover medical expenses, you may want to invest any additional funds—if your employer allows it.
The option for tax-free growth in your HSA can help fortify your savings for retirement, and like other investment strategies, you choose how conservative or aggressive you want to be.
For example, imagine a family investing the 2026 maximum family contribution amount of $8,750 each year for 30 years. If they make equal contributions each month, receive a hypothetical 7% annual rate of return, and never spent any of the funds, they would have over $857,000 accrued in their HSA account. Learn more about investing your HSA >
Estate Planning
If you don’t spend your entire HSA, you can pass your HSA funds on to your heirs.
There are generally three scenarios that will determine how HSA assets are treated upon death, including:
- If the spouse is the designated beneficiary
- If the spouse is not the designated beneficiary
- If the estate is the beneficiary
Your estate planning attorney will be able to provide guidance for how to designate HSA funds after your death.
Maximize Your HSA
Although HSAs are becoming more popular, they're still underused given the advantages they offer. As you learn about the benefits you have available, consider how an HSA could help you prepare for your future.
For more HSA resources, please visit:
• HSAs Pack a Triple-Tax-Savings You Don’t Want to Miss
• Five HSA Facts You May Not Know
• Using Your HSA as a Long-Term Savings Vehicle
This blog is up to date as of October 2025 and has not been updated for changes in the law, administration, or current event.
This is not a guarantee of future performances. Your investment is connected to the stock market and is subject to rise or fall.
HSA contributions are not subject to federal and most states’ income tax. State income tax may apply in California and New Jersey. Please consult a tax advisor for your state’s specific rules.
Shop the HSA Store
Shop for Eligible Items
You may purchase HSA-eligible items online at the HSA Store. Browse medical supplies, over-the-counter medication, prescriptions, and more.
Purchases may result in a small commission to American Fidelity at no additional cost to you.
