No 401(k)? You May Have Another Retirement Savings Option Besides an IRA

When your employer doesn’t offer a 401(k) or another workplace retirement plan, it can feel like an IRA is your only option. Don’t get me wrong, it’s a good one. You can invest in just about anything, and you get valuable tax breaks that can save you money today or in retirement.

The problem is that you can only save up to $7,500 in an IRA in 2026 if you’re under 50, or $8,600 if you’re 50 or older. If you hope to save large sums each year, that might not be enough. But it might not be your only choice, either.

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An HSA could be just what you need

Health savings accounts (HSAs) aren’t designed as retirement accounts, but they can serve that purpose very well. Contributions to these accounts reduce your taxable income in the year you make them, just as contributions to a traditional IRA do.

These accounts allow tax-free medical withdrawals at any age, and once you turn 65, you can take penalty-free withdrawals for any reason. However, you’ll pay ordinary income taxes on non-medical withdrawals.

HSAs have strict eligibility criteria, though. You can only contribute to one if you have a high-deductible health insurance plan. This is defined as one with a deductible of $1,700 or more for an individual health insurance plan in 2026, or $3,400 or more for family coverage. If you don’t check this box, you can spend any HSA savings you already have, or hold on to them. But you can’t stash more money here.

Those who have a qualifying individual health insurance plan can save up to $4,400 in an HSA this year, while those with qualifying family plans can save up to $8,750. Adults 55 and older can add $1,000 to these limits.

How to use your HSA for retirement savings

If you hope to use your HSA as a retirement account, there are a few important guidelines to follow. First, you need to invest your HSA funds. Otherwise, they’ll earn very little interest each year. Look for an HSA provider that enables you to invest the money in your HSA, just like you could with an IRA.

Second, avoid taking medical withdrawals from your HSA before retirement whenever possible. While you may not face any negative tax consequences for tapping your savings to pay for an unexpected doctor bill, this could set your retirement savings back.

Finally, make sure you verify your eligibility every year, as it can change. Also, double-check how much you’re allowed to contribute each year. The government will likely increase the limits over time.