The Perfect Match
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I bet if somebody asked you “How do you plan for retirement?” a few things would quickly come to mind. I contribute to my 401(k), 403(b) or 457; I fund an IRA and or Roth IRA; or maybe a couple other things you’d throw in there. But is this really sufficient planning for retirement or more importantly, is there another avenue that could help you better prepare and put you in a more solid financial situation the day you decide to retire? The answer is simple: yes.
There are many factors to consider in determining how much you'll need to save in order to enjoy a comfortable and financially secure retirement. One often overlooked retirement expense is the cost of health care. Let’s face it, we’re living in the era of rising health care costs and declining retiree medical benefits which only means one thing; more cost for you. Here’s the reality; a couple retiring in 2013 at age 65 will need around $220,000 just to cover their medical expenses throughout their retirement, according to Fidelity.
So what’s the simple solution? Set up a medical 401(k) or better known as an HSA. (Health Savings Accounts). HSA’s are the perfect answer for employee’s that allow them to build a second source of retirement savings and make withdrawals tax-free to pay for medical expenses. In addition to these tax-free withdraws for qualified medical expenses, HSA’s provide individuals the opportunity for pre-tax contributions & tax-deferred growth. Ultimately a Triple-Tax benefit!
Most employers understand the advantage of offering an HSA with regards to the consumerism it can drive. Or if the employer contributes to the HSA account, the benefit that provides to employees. However, there’s something missing. There’s an opportunity for employer’s to change the messaging of HSA’s to really drive home the value of this savings vehicle. They should no longer be looked at as a ‘health spending account’ but rather should be valued as a ‘health saving’s account’, similar to their 401(k).
Employers have the opportunity to position their ‘retirement’ package in a way that the 401(k) is specifically designed for investment purposes and the HSA is designed for health care purposes, both extremely important to making retirement successful. Employers are constantly looking for ways to retain and attract top talent to compete. Use this as an opportunity to enhance your benefit offering while driving the value of life-long financial protection for your employees.
Learn more about using HSAs to boost retirement readiness by listening to our recent Assurance University webinar.
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