Gen X women are now in their 40s and early 50s, and statistics show that they should be aggressive with their finances to catch up with male peers, according to Megan Gorman in her recent blog, “Gen X Women: The Time Is Now To Embrace Health Savings Accounts”. Gorman goes on to discuss how a Health Savings Account may be a great additional tool to jumpstart and catch up in retirement savings.
One of the reasons why women have fallen behind in retirement savings is that when family challenges arise, usually women stretch themselves thin to help others, they do this on top of maintaining their job. Now that Gen X women are past their 20s and 30s, their careers are growing successfully and they are raising children typically out of the toddler range, and they are experienced in managing family challenges. That is why now is a great time to be more aggressive about retirement savings.
Health savings accounts, HSAs, offer a triple tax benefit, which is fairly unique. A contribution to your HSA gives you a tax deduction, there is no tax on funds taken out for health care costs, and the money grows tax deferred. Once you hit 65, the HSA acts like an IRA when you take out funds for costs unrelated to health care. It is important to note, that after 65 you can no longer fund an HSA.
Funding an HSA shouldn’t over shadow other retirement savings, but it should be used in tandem. Health care costs are easily under saved for, because we can’t plan for the unexpected, but setting up an HSA now and putting funds into it is a great way to save towards the medical aspect of retiring and aging.
It is long accepted that women tend to live longer than men do, so you likely will live alone for part of your retirement. Starting to fund an HSA now can help Gen X women (and women not in this demographic) prepare for the potential of outliving your spouse.
As with opening an HSA, establishing your estate plan is also an essential item for Gen X women to conquer. An estate plan isn’t just about what happens when you die, but is also about what happens if you become incapacitated (and need funds drawn from your HSA to cover expenses). At Family Estate Planning Law Group, as part of our ongoing client care program we align, verify and continually track all of our client’s assets, so you can be assured they will be aligned with your estate plan at each phase of life, whether in health, incapacitation, or death, your affairs will be in order.
If you’re a woman in the Gen X generation and you haven’t started saving funds in an HSA, now is the time to consider it. Talk with your estate planning attorney and start working out the best retirement strategy for you, and make sure it is in line with your estate plan.
Reference: The Wealth Intersection, January 9, 2019, “Gen X Women: The Time Is Now To Embrace Health Savings Accounts”