To get higher monthly payments, you have to delay taking your Social Security benefits. You may be able to delay retirement and keep working, but there’s no guarantee. In any case, if you have other financial assets to draw money from, such as a Health Savings Account, it’s easier to delay taking Social Security benefits.
Optimizing Social Security Strategy
Learning how to optimize your social security strategy can mean saving tens of thousands of dollars over your retirement years. The best strategy is to delay collecting Social Security benefits until age 70.
For married couples, you can tag-team. Meaning, one spouse would claim “spousal” benefits (half of the monthly benefit the other would get) until he or she reaches the age of 70 before switching to get the bigger benefit. But how will you support yourself from 62 to 70 if you’re no longer working? The benefits of delaying coverage are so significant that pulling money out of your personal accounts to cover those years could be the best answer. This is where having a Health Savings Account would come in handy.
Once you have an HSA, it allows you to take tax deductions for your HSA contributions to reduce your taxes. While in the account, earnings on those funds are not taxed. And, if you withdraw money to spend on qualified health care, it’s never taxed. A 20-percent tax-penalty is applied if you use the funds for non-qualified purposes before you reach 65. After that, you can use the funds for any purpose and you’ll pay income tax, but there won’t be any penalty. This can really help you with health care costs because you can withdraw money to pay for them at any age. You can continue withdrawing from your HSA to pay for health care tax-free until you’re 70, or even older.
Since you can no longer place contributions in your HSA once you enroll in Medicare, it would be best to get an HSA early so you can build a huge nest egg that you can draw money from once you reach retirement. Having an HSA can definitely help you get the most out of your Social Security benefits.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.