3 Tips for the First-Time HSA Investor

November 27, 2018

When you went through orientation at your first full-time job, you were likely shown graphs and bar charts illustrating the impact that saving for retirement at a young age could have. Good habits and compounding returns can go a long way in helping you achieve your retirement goals.

Health Savings Accounts (HSAs) have emerged as a go-to savings tool, with HSA investments increasing 45 percent to nearly $10 billion nationwide from June 2017 to June 2018. With so many investment newcomers tapping into the long-term potential of HSAs, we’ve compiled three steps to help you build an investment game plan, develop a strategy that’s right for you and put yourself on the path to the retirement of your dreams.*

HSA Investments

Determine how much you can invest

First, decide how much money you can afford to invest. Ask yourself a few questions, such as:

  • How much are my monthly expenses?
  • How much disposable (or investable) income do I currently have?
  • What is my earning potential (next year, five years from now, etc.)?

Your answers to the above questions will help you determine how much your initial HSA investments can be. Don’t hesitate to make an appointment with a financial advisor if you still have questions about your income and expenses.

Set your goals

Saving $1 million for retirement was long considered the standard. But there are many factors that impact your retirement goal, including where you live and how much you currently spend. You should also consider that:

  • The average American retiree leaves the workforce at age 63.
  • Life expectancy for retirees is about 79.

That means, on average, expect to fund 16 years of retirement. And, of course, you’ll want to prepare for more than that. The 4 percent rule states you should save enough for retirement where 4 percent of your total savings would cover your annual expenses, which would cover 25 years.

A 65-year-old couple retiring this year would need an estimated $280,000 just to cover healthcare and medical expenses through retirement. Our HSA goal calculator will help you prepare for those expenses.

Weigh your options

Your investment approach depends on a number of factors, including age, risk tolerance and available funds. Fortunately, there are a number of mutual funds available, including target retirement funds, that cater to any strategy you develop. 

And beyond offering a diverse range of mutual funds for your investments, our integrated investment experience lets you manage your investments directly from your online account. Our participants can also use the Benefits Mobile App by Discovery Benefits to:

  • Check their current and beginning investment balance.
  • Monitor recent investment activity.
  • View their rate of return.

Would you like to learn more about investment potential of an HSA? Find out maximizing HSA investments could help your funds grow at a much faster rate than they would in a cash account.

* (Please note: Discovery Benefits cannot provide investment advice and encourages its participants to seek guidance from a financial adviser for help with investment decisions.)

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