 TITLE: Should I Max Out My HSA Contributions? CONTENT: Should You Contribute the Maximum to Your HSA?\n----------------------------------------------\nThe 2021 maximum HSA contribution is $3,600 for individual HDHP coverage and $7,200 for family HDHP coverage. (Any employer contributions count towards these maximums.) If you'll be 55 or older by the end of the tax year and aren't enrolled in Medicare, these limits increase by $1,000. So, should you max out your HSA?\nIf you can afford to contribute the maximum to your HSA while meeting your other financial goals, there's no downside to doing so. If you're trying to choose between funding your HSA and your 401(k), the decision is more complicated. Start by taking advantage of any \"free money\" offered by your employer.\n*   If your employer contributes to your HSA, open an HSA and fund the minimum amount needed to get the contribution.\n*   If your employer matches your HSA contribution, contribute enough to max out the match.\n*   If your employer matches your 401(k), contribute enough to max out that employer match.\nWhen weighing your options, make sure to look at the big picture, including the rate at which your employer matches contributions to your HSA or 401(k), and whether you're fully vested in your 401(k) or plan to stay with your employer long enough to attain it. A fully vested employee who can take advantage of a generous contribution match from their employer might prioritize their 401(k) over their HSA.\nIf you can afford to contribute more to your HSA, making the maximum contribution each year can be a smart retirement savings strategy. An HSA lets you save for future health care expenses without paying taxes when you withdraw the money, as you'd do with a 401(k). It can also ensure you don't have to tap your retirement funds early for unexpected medical expenses—and pay the associated taxes and penalties. (Some 41% of Americans who withdrew 401(k) funds in the pandemic did so to pay medical expenses.)\nOf course, you don't have to max out your HSA to see benefits. Put $50 or $100 into your HSA each month starting in your 20s and let it grow until retirement. Depending on how you invest the HSA, you could be well on your way to the $295,000 it's estimated a couple retiring today will need to pay for health care in retirement. END