There is a secret retirement account out there that many people aren't considering. Not many people even know that this even exists!

The general consensus is that a 401k and Roth IRA are the holy grails of investing/retirement accounts. The 401k lets you defer tax payment until you retire, and the Roth IRA lets you grow your post-tax money without paying taxes in the future. In both these cases, you still pay tax to the federal government at one point in time.

The Health Savings Account (HSA) is WAY BETTER than both the 401k and Roth IRA. This is the only account that you NEVER HAVE TO PAY TAXES! A HSA is what we call a triple tax advantaged account. You pay into it pre-tax, you don't pay taxes on the capital gains, and you don't pay taxes when you take money out (for medical expenses).

With a HSA, you can contribute up to $3500 per year into this account pre-tax. It stays with you for life just like a 401k or Roth IRA retirement account, even if you leave your employer. You are also able to invest the money within the HSA into the stock market, which should grow at a rate of 8% per year.

The HSA does have one limitation: it is only available with HDHP health plans. Most employers do offer this so take a closer look. Between the PPO, HMO, and HDHP plan, young people should choose the HDHP because they generally incur lower health expenses. When your health expenses are low, the PPO becomes less valuable because you won't be hitting the deductible in any of the health plans.

This is definitely the best retirement account because everyone will have health expenses at one point in life! If you don't have health expenses, this account behaves just like a 401k and you are able to take the money out after 65 years old without a penalty fee.

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#investing #finance #retirement