Industry Voices

Tax-Advantaged Relief and Retirement Savings: HSAs Shape the Way for the Millennial Generation

Jamie Janvier, with ConnectYourCare, discusses how to get Millennials to understand the value of health savings accounts and other tax-advantaged savings.

By PS | July 10, 2017
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Critics have long argued that health savings accounts (HSAs) are designed with the wealthy in mind—those whose incomes allow pre-tax contributions to build up year over year—but the latest research is proving otherwise. HSAs are undeniably being recognized as a tax-advantaged way for the Millennial generation to save for health care costs not only in the moment, but in retirement.

Before discussing the HSA, let’s first understand the audience and its journey. Those that make up the Millennial generation, including the younger population born between the 1990s and the mid-2000s known as Generation Z, are predicted to be working into their 70s, mainly due to financial uncertainties spurred by historically high student loan debt, shrinking median income and the soaring costs of home ownership. As a result, this largest living generation—having recently overtaken Baby Boomers to earn this distinction, according to U.S. Census data—is inevitably getting by, paycheck to paycheck, and stashing less away in savings. What savings these young workers do accrue is likely kept in cash value, vs. informed investment opportunities.

But this is not to say that Millennials do not spend beyond practical means; despite financial struggles, Millennials tend to spend on luxuries they come to trust—items they believe in. Having been born into innovation, they find the latest tech gadgets, for example, important to them, as well as items pertinent to their health, such as gym memberships, fitness trackers, and nutritional foods and supplements.

So, if health is indeed worth the extra spend, is health care up there as a trusted necessity? Not exactly.

Numerous studies have indicated that health insurance and medical care do not make the cut as one of Millennials’ top priorities. Specifically, more than one-third of the generation ranks physical health as its absolute top priority, while less than one in 10 consider obtaining affordable health insurance and access to quality health care as their items of highest importance. Also evident is the absence of routine doctor visits for Millennials, counter to generations preceding them who place a high value on customary physicals and the doctor-patient relationship.

NEXT: Hope … in the form of an HSA