If I could only maximize one investment account, it would be this one | Personal finance

Now, you might be wondering about that rule that says you can only withdraw money tax-free to pay for eligible medical expenses. This might give the impression that the account is not ideal for retirement savings, as you will likely need your retirement funds to cover many different expenses.

The reality, however, is that estimates suggest that an elderly couple turning 65 in 2021 could end up spending around $300,000 to cover medical expenses during retirement. Since medical care will likely take up a significant portion of your retirement budget, chances are you’ll be using a large chunk of your HSA money to pay for care as a senior. You can reserve your HSA for these costs and cover other expenses using Social Security or distributions from your 401(k), which should have money contributing enough to earn your employer’s match.

HSA Also allow you to withdraw money without penalty for any purpose after age 65 – although you will pay tax at your ordinary income tax rate in this scenario. So the worst that happens is that HSAs are taxed like 401(k)s, and the best case scenario is that you get an additional tax benefit by investing in them.