Is a health savings account a good idea in your 20s and 30s?

Advantage to saving early in an HSA

One good reason to contribute to an HSA when you are young is the power of time. When you start saving at an early age, you have the opportunity to let your money compound tax-free for thirty to forty years. That's powerful stuff!

Power of time + Triple tax advantage1 = Your HSA advantage

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Time is on your side
Save while you're young, when you're healthy and your health care costs are lower.

Even if you can't afford much now, you can still contribute a small amount into an HSA.

30 year HSA projection

Chart shows that a $1,000 annual contribution over a 30 year period could potentially build a balance of $79,058 by the time you retire.

If you have a net savings of $1,000 annually, that's your total contributions minus your total expenditures, you could build up a balance of $79,058 by the time you retire.

Meet your match

Your employer may also contribute to your HSA. That's more savings for you!

This hypothetical illustration assumes a net contribution (total annual contributions minus total annual expenditures) of $1.000 each year for 30 years at a 6% rate of return with contributions made at the end of each year. Consider your time horizon and income tax brackets, both current and anticipated, when making any decision, as these may further impact the results of the comparison. Hypothetical results are for illustrative purposes only and are not meant to represent the past or future performance of any specific investment vehicle or account. If you make pre-tax contributions to an HSA, taxes are due upon withdrawal if assets are not used for qualified medical expenses and may incur an additional 20% federal tax unless an exception applies. For amounts invested in mutual funds: Investment return and principal value will fluctuate and when redeemed may be worth more or less than their original cost.

triple tax advantage1

Tax-free interest
and investment earnings
Tax-free payments
for qualified
medical expenses

It's yours for life
You can take it with you if you cange jobs.

Invest funds

Tax-free growth potential

1You can receive tax-free distributions from your HSA to pay or be reimbursed for qualified medical expenses you incur after you establish the HSA. If you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% tax. Any interest or earnings on the assets in the account are tax free. You may be able to claim a tax deduction for contributions you, or someone other than your employer, make to your HSA. Bank of America recommends you contact qualified tax or legal counsel before establishing a HSA.