Higher contribution limits, greater awareness of health expenses in retirement—there are any number of reasons why health savings accounts (HSA) aren’t more popular with retirement plan participants and the general investing public.
Yet a new study finds a lack of consumer education is a leading culprit, and a healthy dose is needed to boost health and retirement saving.
The study from Empower Retirement and Optum Bank found that:
- Even employees who have an HSA often don’t understand how they work or how contributions can grow.
- Most have no idea how much healthcare will cost in retirement.
- But they are open to learning more from employers, especially when they see the benefits of an HSA.
“And while employees can use an HSA to pay for current out-of-pocket qualified medical expenses, a longer-term strategy of building up the balance in the HSA for healthcare expenses in retirement is one of the most powerful steps employees can take for retirement planning,” the authors note, before starkly adding, “Unfortunately, many are missing out on this opportunity.”
The resulting white paper points to three main findings:
Employees want advice about how to plan for the future
While many consumers have some experience with investing, they are open to learning more about it.
Employees don’t understand the retirement benefits of an HSA
Employees likely have more than one account to plan and pay for retirement—primarily a 401k and a savings account. And while 47% currently have or have had an HSA in the past, they do not identify the HSA as a way to save for retirement.
Employers can play a key role when it comes to the HSA education
Many consumers are unaware of how much they will need to save for healthcare during retirement, and different age groups have different preferences for how they want to learn.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
