HSA Investments

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Topic Author
4byMAF
Posts: 3
Joined: Mon Aug 02, 2021 4:04 pm

HSA Investments

Post by 4byMAF »

My wife’s and my current HSA accounts are at Fidelity and are 100 percent invested in FSKAX (Fidelity Total Market Fund). We currently pay all healthcare expenses out of pocket and do not draw from the HSAs. The current combined balances are approximately $143k. Our total portfolio is mid 7 figures, along with a pension. We max out the contributions each year for the accounts. I am retired and turn 60 this year (wife is 58). My plan all along has been to contribute, as allowed, until I turn 65 and then start drawing from the accounts to pay Medicare premiums until the accounts are exhausted.

My question is regarding what others have done and how to invest in the accounts from now until I turn 65. Should I leave it all invested in FSKAX or switch to cash (MMFs, CDs, Tbills, etc.) now or at some point in the future or some combination of both? I have sufficient cash flow to not draw from the accounts for a time, if, for example, I left the funds invested in FSKAX, and there was some kind of extended market melt down turn when I was post age 65.

Thanks in advance!
toblerone
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Joined: Thu Mar 07, 2013 10:42 pm

Re: HSA Investments

Post by toblerone »

4byMAF wrote: Sat Apr 01, 2023 9:18 pm My question is regarding what others have done and how to invest in the accounts from now until I turn 65.
Mid 50s here. I keep about 5% of the HSA (appx one year's max out-of-pocket) in short term bonds, MMF, or cash. The rest is invested in a total stock market index fund. I plan to glide toward a higher bond/cash allocation as I approach 65 (perhaps 5 years of medicare premiums+deductibles), and I include the HSA as part of my overall AA calculation.
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dogagility
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Re: HSA Investments

Post by dogagility »

I include the HSA as part of my overall AA calculation.
This is my suggestion as well.
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dcabler
Posts: 4544
Joined: Wed Feb 19, 2014 10:30 am
Location: TX

Re: HSA Investments

Post by dcabler »

4byMAF wrote: Sat Apr 01, 2023 9:18 pm My wife’s and my current HSA accounts are at Fidelity and are 100 percent invested in FSKAX (Fidelity Total Market Fund). We currently pay all healthcare expenses out of pocket and do not draw from the HSAs. The current combined balances are approximately $143k. Our total portfolio is mid 7 figures, along with a pension. We max out the contributions each year for the accounts. I am retired and turn 60 this year (wife is 58). My plan all along has been to contribute, as allowed, until I turn 65 and then start drawing from the accounts to pay Medicare premiums until the accounts are exhausted.

My question is regarding what others have done and how to invest in the accounts from now until I turn 65. Should I leave it all invested in FSKAX or switch to cash (MMFs, CDs, Tbills, etc.) now or at some point in the future or some combination of both? I have sufficient cash flow to not draw from the accounts for a time, if, for example, I left the funds invested in FSKAX, and there was some kind of extended market melt down turn when I was post age 65.

Thanks in advance!
I keep mine as 100% stock, same as I would for a Roth, to maximize tax-free long term growth and will continue to do so when I start retirement in the next few weeks (age 62). It is considered part of my overall asset allocation, but if a rebalance is needed for stock, I do that in other accounts, not this one.

If I were concerned about some sort of future meltdown, then I'd think about my overall AA, not just this one account.

cheers
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Lemonaid56
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Location: Maine

Re: HSA Investments

Post by Lemonaid56 »

My wifes HSA also invested 100% FSKAX. Also pay all bills out of pocket planning on using the money to pay healthcare in future.
Only wish her company had made this available early on in her career. Was only able to access this the last 3-4 years I think.
TwstdSista
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Joined: Thu Nov 16, 2017 3:03 am

Re: HSA Investments

Post by TwstdSista »

We keep $10k of our HSA funds in a rolling 3 month T bill just in case we need to withdraw at some point. The rest in invested (in FZROX).
dcabler
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Joined: Wed Feb 19, 2014 10:30 am
Location: TX

Re: HSA Investments

Post by dcabler »

Lemonaid56 wrote: Sun Apr 02, 2023 9:44 am My wifes HSA also invested 100% FSKAX. Also pay all bills out of pocket planning on using the money to pay healthcare in future.
Only wish her company had made this available early on in her career. Was only able to access this the last 3-4 years I think.
Same here - I've only had access to an HSA for the last 6 years.

cheers
willyd123
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Joined: Mon Feb 19, 2018 6:23 am

Re: HSA Investments

Post by willyd123 »

My circumstances and numbers are almost identical to yours. I invest all of our HSA assets in VTI (100% US equity) and plan to continue to do so for the foreseeable future as I don't plan to tap these assets until we're maybe 80 or so (20 years from now).

We plan to use these assets as our long-term care fund, if we ever need such care.

One point on your situation...don't forget that since your wife is a few years younger than you (same as me), she can contribute up until she goes onto Medicare as well. I'm sure you are aware.
passive101
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Joined: Tue May 05, 2020 2:47 pm

Re: HSA Investments

Post by passive101 »

dogagility wrote: Sun Apr 02, 2023 5:11 am
I include the HSA as part of my overall AA calculation.
This is my suggestion as well.
I keep my HSA separate because if I have to withdraw money from it I don't want to worry about rebalancing. I also don't want it as a single asset class in case that one significantly if I have to withdraw at that time. I'm currently planning on holding my HSA long term if it's not necessary, but I do have it that way as the backup plan since this is the purpose of the account.
Doc7
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Re: HSA Investments

Post by Doc7 »

passive101 wrote: Mon Apr 03, 2023 9:13 am
dogagility wrote: Sun Apr 02, 2023 5:11 am
I include the HSA as part of my overall AA calculation.
This is my suggestion as well.
I keep my HSA separate because if I have to withdraw money from it I don't want to worry about rebalancing. I also don't want it as a single asset class in case that one significantly if I have to withdraw at that time. I'm currently planning on holding my HSA long term if it's not necessary, but I do have it that way as the backup plan since this is the purpose of the account.

An excellent way to handle this is to simply invest in the target retirement fund that matches your portfolio AA. This makes it a mini replica of your portfolio with zero rebalancing required. (If you consider overall Stocks to bonds mix only). This is what I have done. At Fidelity you also get access to the $10Million Minimum Institutional freedom 20xx index funds with no minimum and very low ER in the HSA.
Topic Author
4byMAF
Posts: 3
Joined: Mon Aug 02, 2021 4:04 pm

Re: HSA Investments

Post by 4byMAF »

Thanks all for your responses. This has been very helpful.
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