HSA Balances Are Growing—But Most Americans Are Still Missing Out on the Biggest Advantage

Key Takeaways

• HSA balances have hit a record high, but most account holders still keep money in cash instead of investing it.
• That could be a costly missed opportunity, especially with retirement health care expenses potentially reaching six figures.
• You don’t have to choose between spending and investing—keeping enough cash for near-term needs can leave the rest free to grow.

Americans Have More Money in Their HSAs Than Ever

The average Health Savings Account (HSA) balance was $5,532 in 2024, according to a new report from the Employee Benefit Research Institute (EBRI). That’s up from $4,747 the year before and the highest since EBRI began tracking the data in 2011, when the average was $1,990.12

Contributions are rising, too, at least on the employee side. Workers contributed an average of $2,308 to these tax-advantaged accounts for medical expenses in 2024.1

The growing popularity of HSAs isn’t surprising. These accounts offer a triple tax advantage: Contributions can lower your taxable income, the money grows tax-free, and withdrawals for qualified medical expenses are also tax-free.

After age 65, you can withdraw HSA funds for any purpose without a penalty, though non-medical withdrawals are taxed as income.

Why This Matters

An HSA can do more than help pay today’s medical bills. Leaving some of that money invested could give you a valuable tax-advantaged cushion for retirement health care.3

But Most HSA Money Is Still Sitting in Cash

Balances are climbing, but most account holders still use their HSA primarily for near-term medical bills rather than as a long-term investment account.

HSA funds can be invested much like money in a 401(k) or IRA, yet only 18% of account holders put any of their HSA balance into investments in 2024, according to EBRI.1 Keeping everything in cash can mean giving up years of potential growth.

Cash balances typically earn modest interest, especially compared with the returns long-term investing may provide. For example, $5,532 invested for 30 years at an average annual return of 7% could grow to roughly $42,100. Add regular contributions to the mix and the number climbs further.

Many households also have room to contribute more. The average combined contribution from employees and employers in 2024 was $505 below the maximum for individual coverage and $4,755 below the family maximum.1

That Could Matter Much More by the Time You Retire

That missed opportunity can seem small now—until you consider how much health care can cost in retirement and how much Medicare may leave you to cover.

Fidelity found that a 65-year-old retiring in 2026 should expect to spend $185,500 on health care and medical expenses throughout retirement, up 7.5% from a year earlier. For couples, that amount roughly doubles.4

And that’s for 2026. If you still have years before retirement, the total could be much higher, especially as health care costs continue to rise.

None of this means you should avoid using your HSA for current medical bills—for many households, that’s exactly what the account is for. But if you can comfortably cover some out-of-pocket costs from other savings, leaving more money in your HSA could give it more time to grow.

The more you can leave invested in your HSA, the bigger a cushion you’ll have for one of retirement’s largest and least predictable expenses.

How to Decide Whether You Should Spend or Invest Your HSA

The right balance between spending and investing depends on your household finances, medical needs, and how much you can afford to contribute. Here are a few factors to consider:

• Near-term medical needs. If you have upcoming procedures or ongoing treatment, keeping enough cash on hand to cover them makes sense before the rest—unless you can comfortably pay those costs from other savings. A common benchmark is to keep at least enough in cash to cover your health plan’s deductible.5
• Emergency savings. If you don’t have a cash cushion outside your HSA, building one may be the better first step. Don’t invest money you might need on short notice, whether for medical costs or other expenses.
• Investment minimums. Many providers require you to keep a minimum amount in cash before investing the remainder.6
• Contribution capacity. Larger contributions mean more money available to invest each year. For 2026, the limits are $4,400 for self-only coverage and $8,750 for family coverage, plus a $1,000 catch-up contribution for those 55 and older.7
• Time horizon. The further out retirement is, the more time your investments have to recover from market dips. As retirement gets closer, holding more in cash can reduce the risk that you’ll need to sell investments during a market decline.

Remember, it doesn’t have to be all or nothing. Even investing part of your HSA balance can help build a larger pool of money for future health care costs.

Article Sources

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1. Employee Benefit Research Institute. “Trends in Health Savings Account Balances, Contributions, Distributions, and Investments, 2011–2024.”
2. Employee Benefit Research Institute. “A Close Look at the EBRI Health Savings Account Database.” Page 6.
3. Employee Benefit Research Institute. “2026 Retirement Confidence Survey Finds Americans Less Confident About Retirement as Worries Grow Over Social Security, Medicare and Rising Costs.”
4. Fidelity Investments. “Fidelity Investments Shares 25th Annual Retiree Health Care Cost Estimate.”
5. Fidelity Investments. “How Much Should You Contribute to Your HSA?“
6. Morningstar, Inc. “2025 Health Savings Account Landscape.”
7. Internal Revenue Service. “Rev. Proc. 2025-19,” Pages 1-2.