2. Contribute each year beyond your immediate needs
With a flexible spending account, your goal should be to only contribute money you expect to spend within a year. HSAs work differently. Because HSAs never expire, there’s no pressure to estimate your exact healthcare costs for the year and limit your contribution to that figure. In fact, it specifically pays to put more money into your HSA than you expect to need in the near term, because funds that aren’t used immediately can be invested tax-free and grow into an even larger sum.
It’s this very HSA feature that makes it a viable retirement savings tool. If you keep overfunding your account year after year, and keep carrying your balance forward, by the time retirement rolls around, you’ll potentially have a large pool of cash to use for healthcare — which will likely be one of your most significant expenses once you stop working.
3. Make catchup contributions to your account
Much like IRAs and 401(k)s, HSAs allow savers to make catchup contributions when they’re older. The difference, however, is that with an IRA or 401(k), catchups begin at age 50. With an HSA, they begin at 55. Once you reach that point, you can contribute another $1,000 on top of the limit that already applies to you.