A health savings account (HSA) can reimburse you, income-tax-free, for all qualified medical out-of-pocket expenses not covered or reimbursed by other insurance. That will come in handy in retirement; depending on your age, you can expect only to have anywhere from 69% to 72% of your Social Security income left after paying out-of-pocket medical expenses.
Health care costs have increased by 7.9% from 2025 to 2026, according to the Millman Medical Index. A 65-year-old individual will need $185,500 in after-tax savings to cover health care expenses in retirement, according to the 2026 Fidelity Retiree Health Care Cost Estimate. That's a 7.5% increase over the 2025 estimate of $172,500. With some planning, an HSA can help you defray these costs.
