HSA or 403(b)

[monarda]

Quick question, since it's the time of year to tweak health plans at work.

I'm 63. Still working part-time.

I have been aggressively adding to both my 403(b) and my HSA each paycheck for the past 8 years.
I want to cut back to have a little more funds readily available in checking and savings.

Does it matter, at my age, if I contribute less to 403(b) or HSA? I have them invested the same way in those accounts - Vanguard Target date retirement fund (2025).

WWYD? Less to both? Less to one or the other? Maybe it doesn't matter.

[EvenSteven]

Tax treatment of the HSA is a little better if used for medical expenses. Do you have ongoing medical expenses or saved up past expenses that would make those funds available if needed?

The only scenario where I could see the 403b being better is if you need to access the money between age 59.5 and 65, and don't have medical expenses that would make the HSA withdrawal be for a qualified medical expense. Otherwise I would probably prioritize the HSA.

[monarda]

Tax treatment of the HSA is a little better if used for medical expenses. Do you have ongoing medical expenses or saved up past expenses that would make those funds available if needed?

The only scenario where I could see the 403b being better is if you need to access the money between age 59.5 and 65, and don't have medical expenses that would make the HSA withdrawal be for a qualified medical expense. Otherwise I would probably prioritize the HSA.

No ongoing medical expenses. Right now. Knock wood. I expect a couple of crowns in the next decade, but that's about it.

I have Roth IRAs that are accessible, too (but haven't needed to access). And also a 457(b) that's about half Roth and half traditional. Not currently contributing to those.

The HSA and 403(b) contributions are both pre-tax.

[EvenSteven]

Tax treatment of the HSA is a little better if used for medical expenses. Do you have ongoing medical expenses or saved up past expenses that would make those funds available if needed?

The only scenario where I could see the 403b being better is if you need to access the money between age 59.5 and 65, and don't have medical expenses that would make the HSA withdrawal be for a qualified medical expense. Otherwise I would probably prioritize the HSA.

No ongoing medical expenses. Right now. Knock wood. I expect a couple of crowns in the next decade, but that's about it.

I have Roth IRAs that are accessible, too (but haven't needed to access). And also a 457(b) that's about half Roth and half traditional. Not currently contributing to those.

The HSA and 403(b) contributions are both pre-tax.

Worst case (tax-wise, not life-wise) is that you will have no medical expenses and will lead the rest of your life perfectly healthy. In that case the HSA will be equivalent to your 403b after age 65. In the more likely event that you will have medical expenses later in life, you will get a bit of a tax break by contributing to the HSA before the 403b.

Edit to add: An HSA has a bit worse tax treatment than an IRA to any non-spouse who might inherit from you after you pass, if that matters.

[monarda]

Tax treatment of the HSA is a little better if used for medical expenses. Do you have ongoing medical expenses or saved up past expenses that would make those funds available if needed?

The only scenario where I could see the 403b being better is if you need to access the money between age 59.5 and 65, and don't have medical expenses that would make the HSA withdrawal be for a qualified medical expense. Otherwise I would probably prioritize the HSA.

No ongoing medical expenses. Right now. Knock wood. I expect a couple of crowns in the next decade, but that's about it.

I have Roth IRAs that are accessible, too (but haven't needed to access). And also a 457(b) that's about half Roth and half traditional. Not currently contributing to those.

The HSA and 403(b) contributions are both pre-tax.

Worst case (tax-wise, not life-wise) is that you will have no medical expenses and will lead the rest of your life perfectly healthy. In that case the HSA will be equivalent to your 403b after age 65. In the more likely event that you will have medical expenses later in life, you will get a bit of a tax break by contributing to the HSA before the 403b.

Thanks!

[MDM]

No ongoing medical expenses. Right now. Knock wood. I expect a couple of crowns in the next decade, but that's about it.

Upcoming Medicare premiums?

No guarantees either way, but medical expenses are usually present as one ages, so for most (e.g., see Investment Order) the HSA will be better.