"Choosing the Right Retirement Account: Roth or Traditional?"
Financial advisors recommend that after saving enough money to receive the full employer match in a 401(k) plan, individuals should prioritize saving their next dollars in a health savings account (HSA) if available. HSAs offer unique tax benefits, including tax-free contributions, tax-deferred investment growth, and tax-free withdrawals for eligible medical expenses. A recent analysis by Vanguard shows that a $1 investment in an HSA would yield $4.29 over 25 years, compared to $2.98 in a pre-tax or Roth IRA. HSAs also allow for investment and portability, making them a valuable tool for retirement preparation. However, not everyone has access to an HSA, as they are only available to those enrolled in a high-deductible health plan. The order of operations for saving money generally involves maximizing employer matches, prioritizing HSAs, and then considering other savings options based on individual circumstances.