Roughly three-quarters of people who have HSAs withdraw less than they contribute. People who invest their HSA money in stocks and bonds have an average balance of $14,000 compared with $2,500 for those who keep it 100 percent in cash, according to new research from Fidelity Investments based on data from the accounts it administers.
"An HSA is an ideal vehicle to fund retiree medical expenses," said Chris Byrd, executive vice president at WEX Health, a payments technology company that administers benefits for more than 225,000 employers.
Health costs in retirement can seem daunting. Fidelity estimates that a 65-year-old couple retiring in 2016 would need roughly $260,000 to cover health-care costs during retirement. Sounds like a daunting number. But keep in mind that is over all your retirement. So if you have 22 years of retirement, that's roughly $985 per month. It is still a high number, but not insurmountable.
How should people invest their HSA money? "It's going to be a different case for everyone," Dowley said. Generally, you should have enough cash in your HSA to cover expected medical expenses and invest the rest.
Here are some portfolio guidelines Fidelity uses based on age: