How Much Should I Have in My HSA at Retirement?

Most national estimates put the figure between $175,000 per person and roughly $345,000 for a 65-year-old couple retiring in 2025, and that is the honest floor for how much you should have in your HSA at retirement. Fidelity’s widely cited annual study anchors the lower end. The Employee Benefit Research Institute pushes the number as high as $469,000 for a couple with heavy prescription drug use who wants a 90 percent chance of covering their costs.¹ Your right number sits somewhere in that range, adjusted for your health, when you stop working, and whether long-term care is in the picture.

What the National Benchmarks Actually Cover

Fidelity’s estimate covers Medicare Part B and Part D premiums, copayments, and out-of-pocket prescription costs for someone enrolled in original Medicare. It does not include long-term care, which can dwarf every other line item if you end up needing a nursing facility or a sustained home health aide. The estimate also assumes a standard lifespan, so living into your 90s stretches the figure further.

EBRI’s numbers show how wide the range gets once you layer in supplemental coverage. A couple enrolled in a Medigap plan needs $405,000 for a 90 percent confidence level, or $267,000 if they are comfortable with roughly even odds of running out.² Read together, the studies suggest $300,000 is a reasonable starting point for a couple, not a comfortable ceiling.

Factors That Move Your Target Up or Down

Your actual number can land well above or below the averages. A family history of chronic illness, current medications, or conditions that tend to worsen with age all push the figure higher. Someone managing diabetes or a cardiac condition should plan for decades of specialist visits, lab work, and prescriptions that compound over time.

When you retire matters almost as much as how healthy you are. Leaving the workforce before 65 opens a gap where you must cover private insurance premiums without Medicare, and those can easily run $500 to $800 a month per person on the individual market. Your HSA is one of the few tax-free ways to pay them. Geography also plays a role: healthcare in major coastal metros tends to cost significantly more than in rural parts of the Midwest or South.

Long-term care is the wildcard most people underestimate. You can use HSA funds to pay premiums on a qualified long-term care policy, but only up to age-based limits the IRS sets each year.³ For 2025, those limits are $4,810 for someone age 61 to 70 and $6,020 for anyone older than 70.⁴ If you plan to carry a policy into retirement, adding those annual premiums to your target can add five or six figures over a couple of decades.

How Much You Can Still Add in 2026

Under 26 U.S.C. § 223, the IRS caps annual HSA contributions.⁵ For 2026, the limits are $4,400 for self-only coverage and $8,750 for family coverage.⁶ If you are 55 or older by year-end, you can add another $1,000 as a catch-up contribution. So a 57-year-old with family coverage can contribute up to $9,750 next year.

Employer contributions count toward the same cap, including anything routed through a cafeteria plan.⁷ If your employer deposits $2,000, your personal contributions can only fill the room left under the limit. Missing the employer portion is one of the easier ways to create an excess contribution, which triggers a 6 percent excise tax every year the overage stays put.⁸

Medicare Enrollment Stops Contributions Cold

Once you enroll in any part of Medicare, your HSA contribution limit drops to zero. You can still spend what is already in the account, but you cannot add another dollar.⁸ This detail trips people up more than almost anything else in HSA planning.

The trap has a second edge. When you sign up for Medicare Part A after age 65, coverage is retroactive for up to six months, though never before your 65th birthday. Any HSA contributions made during that retroactive window count as excess contributions. If you plan to work past 65 and keep funding your HSA, stop contributions at least six months before you apply for Medicare.

Enrolling in Social Security automatically enrolls you in Medicare Part A. If you are delaying Medicare specifically to keep funding your HSA, you have to delay Social Security as well. Getting the sequence wrong can erase years of careful planning.

Spending the Balance After 65

The tax treatment shifts meaningfully at 65. Before then, pulling money out for anything other than a qualified medical expense triggers income tax plus a 20 percent penalty. After 65, the penalty disappears.⁸ The account then functions much like a traditional IRA for non-medical spending: you owe ordinary income tax on the withdrawal, at whatever rate applies that year (10 to 37 percent for 2025).⁹

Money used for qualified medical expenses stays completely tax-free at any age. That triple advantage is the whole reason HSAs beat every other retirement savings vehicle for healthcare spending, and it is why running medical bills through the HSA first and living expenses through traditional accounts usually produces a better after-tax result.

What Qualifies, and What Does Not

IRS Publication 502 lists qualifying expenses in detail.¹⁰ Dental work, vision care, prescriptions, lab tests, and surgery all qualify. You can also pay Medicare Part B and Part D premiums with HSA funds, Medicare Part A premiums if you owe them, and your share of employer-sponsored retiree health insurance premiums.

The notable exclusion is Medigap. Medicare supplement policy premiums are not qualified medical expenses, even though they cover gaps in Medicare coverage.¹¹ COBRA continuation premiums do qualify, and so do qualified long-term care premiums up to the age-based limits. Mixing these up is the difference between a tax-free withdrawal and an unexpected tax bill.

State Taxes Can Change the Math

The federal triple tax advantage does not automatically apply at the state level. California and New Jersey tax both HSA contributions and investment earnings, so residents there lose a meaningful chunk of the benefit. A few states with no income tax have no deduction to offer in the first place but do not tax the growth either. The federal benefits alone are still substantial, but if you live in a state that does not follow federal HSA treatment, your net savings will be lower than most online calculators show. Check your state before running projections.

Who Inherits the Balance

If you build a six-figure HSA and it outlives you, the beneficiary designation determines whether the account survives its tax benefits.

Spouse as beneficiary: the account simply becomes your spouse’s HSA, and they keep using it tax-free for medical expenses.⁸
Non-spouse beneficiary: the account stops being an HSA immediately, and the full fair market value is included in the beneficiary’s taxable income for the year of your death. That taxable amount can be reduced by any of your qualified medical expenses the beneficiary pays within one year after the date of death.
Estate as beneficiary: the value is included on your final income tax return.

For married couples, naming the spouse is almost always the right move. Leaving a large HSA to an adult child without warning hands them a substantial tax bill in a single year, which is worth factoring into how you allocate the account across your overall estate plan.

1
Employee Benefit Research Institute (EBRI). Projected Savings Medicare Beneficiaries Need for Health Expenses in Retirement up Again in 2025
2
Employee Benefit Research Institute. New EBRI Report Finds Some Medicare Households May Need Nearly $500,000 for Health Care in Retirement
3
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
4
Internal Revenue Service. Eligible Long-Term Care Premium Limits for 2025
5
Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts
6
IRS. Rev. Proc. 2025-19
7
Internal Revenue Service. HSA Contributions
8
Internal Revenue Service. Publication 969 (2025), Health Savings Accounts and Other Tax-Favored Health Plans
9
Internal Revenue Service. Federal Income Tax Rates and Brackets
10
Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
11
IRS. Notice 2004-2