While some of you are only just getting your head around saving for retirement in your 20s, here's something you might want to consider before throwing all your gold eggs into the 401(k) basket. Finance experts say your health savings account (HSA) could be a better place for your next dollar. Why? According to Money, it's tax free as long as you use the money for medical expenses. Any contributions you put into or take out of the account aren't taxed. Whereas any cash you deposit into a traditional 401(k) is taxed as income when you withdraw. So how do you get started? HSA was designed to help you save for out-of-pocket medical costs, so anyone with a high-deductible health plan can get one. Money in an HSA can be invested in stocks and bonds similar to a 401(k), and you can remove funds at any time before age 59 1/2 without being penalized, unlike with a 401(k). The only thing is that money from an HSA has to be used toward medical expenses, or you'll be hit with a 20% penalty and owe regular income taxes.
To read more about the benefits of HSA versus 401(k), visit Money.
Be money-wise with our below finance favorites.
Where will you invest your money for retirement? Share your comments below.
M-Clip 'Monterey' Money Clip ($250)
“Men seem to have a mutual dislike for carrying around change. It’s quite possibly due to the lack of room in their back pockets to carry it around, and fair enough. So their preference is for cash, my dad included, and this pretty snazzy money clip is the chicest way to flash it in public.” — Sacha Strebe, MyDomaine lifestyle editor
Tiffany & Co. Piggy Bank in Sterling Silver ($2000)