Motley Fool Money

Episode: 401(k) Millionaires and Maximizing Your HSA
Date: September 13, 2025
Host: Robert Brokamp
Guest: Roger Young (T. Rowe Price, Thought Leadership Director)

Overview

This episode dives into two key areas of personal finance: the dramatic growth in 401(k) millionaires and practical, strategic ways to maximize a Health Savings Account (HSA). The show opens with major takeaways from Fidelity’s annual retirement analysis and discusses how markets—stocks, bonds, and precious metals—are impacting investors. The main segment features Roger Young from T. Rowe Price, who unpacks HSA rules, tax strategies, and how to integrate an HSA into your broader financial and retirement planning.

Key Discussion Points and Insights

1. Retirement Trends and 401(k) Millionaires

[00:05 – 04:54]

• Record Savings Levels

  • Average 401(k) balance is up 8% YoY to nearly $138,000 (a historic high).
  • IRA balances and contribution rates are also at all-time highs.
  • Number of 401(k) millionaires hit a record 595,000 accounts.

• What It Takes to Be a 401(k) Millionaire

  • “A long career, decades of saving and a high savings rate.” (Robert, 01:13)
  • Average 401(k) millionaire is 59, has contributed for 25 years, and has a 25.9% contribution rate (including employer match), 10 points above average for their age group.

• Market Snapshots

  • Bond market dynamics: Short-term rates dropping, long-term holding steady amid budget deficit worries.
  • Mortgage rates down to 6.27%, lowest in about a year.
  • Bond ETF up 6.6% YTD—could be best bond year since 2020.
  • Gold and silver ETFs outperforming stocks over the last three years.

2. Maximizing Your HSA: A Deep Dive with Roger Young

[05:54 – 22:04]

HSA Basics and Contribution Strategies

• HSAs offer “triple tax advantage”: Pre-tax contributions, tax-deferred growth, tax-free withdrawals for qualified expenses.
• To participate, you must have a high-deductible health plan (HDHP).
• Prioritize maxing your company retirement account match first.
• “Put enough in [the HSA] to cover your deductible... possibly your out-of-pocket maximum.” (Roger, 07:23)
• 2025 contribution limits: $4,300 for individuals, $8,550 for families.

Investment vs. Spending Approaches

• Money needed soon for healthcare? Keep it in cash. For longer term, consider investing more aggressively.

• Motley Fool guidance: “Don’t invest money you’ll need in 3–5 years.” (Robert, 08:47)

• Some treat HSAs as exclusive retirement vehicles, others use funds as needed—both are valid, depends on personal finances.

  • “...if you have a lot of savings capacity and you can invest that money in your HSA long term, by all means, do what you can to max it out.” (Roger, 08:12)
  • "Let it grow tax free, at least until retirement." (Roger, 10:14)

HSAs in Retirement & Tax Efficiency

• Post-age 65 / Medicare: No more HSA contributions allowed.

• “Medicare premiums are considered qualified expenses for HSAs. That’s different from most insurance premiums.” (Roger, 11:48)

• Long-term care expenses and traditional LTC insurance are qualified; hybrid policies are not.

• After 65, the 20% penalty on non-medical withdrawals disappears; withdrawals are taxed as ordinary income, like a traditional IRA.

• Record-keeping allows you to withdraw for past medical expenses tax-free, even years later.

  • “You need to keep good records…because you’re adding up potentially years and years worth of those medical expenses and you want to be able to justify that just in case you’re audited.” (Roger, 13:32)

• HSA funds are valuable for tax-efficient retirement strategies (keeping under key income thresholds, managing tax brackets).

Estate Planning & Beneficiaries for HSAs

• HSA left to a spouse: Full transfer as an HSA; to others: entire amount becomes taxable in year inherited.

• Designating specific beneficiaries is crucial for flexibility and potential tax-free use for end-of-life expenses.

  • “Always name a specific beneficiary to inherit it because your heirs are going to have a lot more flexibility.” (Robert, 17:43)

3. High Deductible Plans vs. Traditional Health Plans

[18:04 – 22:04]

• Open enrollment is approaching—decision time for many listeners.
• Sometimes companies structure plans so that high-deductible options are financially dominant (per economist Richard Thaler).
• Weigh premium savings against higher deductibles.
• Rule of thumb: Sum the premium savings with the lower deductible to estimate a “break-even” for medical expenses.
• “If you expect those expenses to be over $2,500, then the low deductible plan makes sense…under $2,500, the high deductible plan is better in that example.” (Roger, 19:24)
• Chronic conditions or high prescriptions might tip the scale toward traditional plans; otherwise, tax advantages could favor HDHPs + HSA.
• $4,000 HSA contribution could be worth $1,000–$2,500 more than a comparable Roth contribution, depending on bracket and horizon.

Notable Quotes & Memorable Moments

• On 401(k) Millionaires:
  “A long career, decades of saving and a high savings rate.”
  — Robert Brokamp, (01:13)

• On HSA Value:
  “HSAs are great from a tax perspective, there’s nothing better.”
  — Roger Young, (06:46)

• On HSA Record-Keeping:
  “You need to keep good records…just in case you’re audited.”
  — Roger Young, (13:32)

• On HSA vs. Roth for Heirs:
  “The Roth account is much more tax friendly than for a non spouse beneficiary than an hsa...I call that suboptimal use of an HSA.”
  — Roger Young, (15:47)

• On Choosing Health Plans:
  “You add those together…that’s approximately what we’ll call the break-even point, the point in medical expenses where one becomes better than the other.”
  — Roger Young, (19:12)

• On Naming Beneficiaries:
  “Always name a specific beneficiary to inherit it because your heirs are going to have a lot more flexibility.”
  — Robert Brokamp, (17:43)

Key Timestamps

| Segment | Timestamp | |-----------------------------------------------|--------------| | 401(k) millionaire statistics & profiles | 00:05–02:20 | | Market/bond/gold news | 02:21–04:54 | | Intro to HSA tax advantages | 05:54–06:19 | | HSA contribution strategies | 06:22–08:44 | | Investing vs. spending HSA funds | 08:44–11:25 | | HSA use in retirement | 11:25–15:47 | | Tax efficiency & estate planning | 15:47–18:04 | | Choosing between health plans (HDHP vs. trad)| 18:04–22:04 |

Additional Practical Tip

Home Cost Basis Recordkeeping
At the end, Robert shares advice on tracking home costs and improvements to calculate cost basis for taxes when selling, and tips for locating lost documentation (23:10). He reminds listeners about the IRS home sale capital gains exclusion and the importance of keeping records organized.

Summary

This episode offers a comprehensive view of two pivotal personal finance tools: the 401(k) and the HSA. Listeners are armed with historical context, actionable strategies, and expert insights—from the value of slow-and-steady retirement saving, to maximizing every advantage an HSA offers now and into retirement, to making informed health plan choices. The tone is educational yet practical, aiming to empower listeners to optimize their finances and avoid common pitfalls.