Average HSA Balance by Age: How Much Is Typical
Average health savings account (HSA) balances remain low across every age group, from around $1,150 for people under 25 to roughly $9,000 for those 65 and older. The mistake we see readers make most often is comparing their balance only with the national average, rather than with others of the same age and with similar years of contributing.
The main reason balances stay thin is straightforward: Most people use their HSA like a checking account instead of investing the money and letting it compound. A better target than the raw national average is the balance a fully invested HSA could reach if you began contributing consistently at your current age.
What Counts as a Good HSA Balance by Age
A good HSA balance roughly tracks how long you have been contributing, since account size follows tenure far more than any single windfall. Devenir Research, a firm that tracks HSA account data industry-wide, found that accounts opened in 2004 averaged nearly $35,000 by the end of 2025. Accounts opened in 2025 averaged only about $2,181 over that same stretch. That twenty-year head start explains almost the entire gap.
The Employee Benefit Research Institute (EBRI) breaks the same pattern out by age. Accountholders under 25 average roughly $1,150.
That figure climbs to about $4,400 by ages 35 to 44 and reaches roughly $9,000 for accountholders 65 and older. EBRI does not publish exact figures for every ten-year bracket in between. But the trend holds steady: balances rise with age mainly because the money has more years to sit and compound.
Use those figures as a reference point for where you stand today. A number below your age bracket usually reflects how the account has been used. It rarely reflects how much money was ever available to save in the first place.
Why Most HSA Balances Stay So Low
Most HSA balances stay low because people spend the money almost as fast as they put it in. They treat the account like a second checking account instead of a long-term investment. Only 18% of HSA accountholders invested any part of their balance in anything beyond cash in 2024, according to EBRI.
The other 82% left every dollar sitting in a cash account that earns close to nothing. This happens for a plain reason. Most employers hand new hires an HSA debit card on day one and never explain how the account differs from ordinary spending money.
Swiping that card at the pharmacy feels the same no matter which account it draws from, so the balance never gets a chance to build. A second reason is friction inside the account itself. Many HSA administrators require a minimum cash cushion, often $1,000 to $2,000, before they let you invest any part of the balance.
A reader who has never crossed that threshold cannot invest, even after deciding they want to.
How Invested HSA Balances Compare to Cash Balances
Invested HSA balances run far larger than cash-only balances, and the gap is not small. Devenir found that the average invested HSA held about $24,252 at the end of 2025. That is roughly 9.7 times the average balance of an account left entirely in cash.
Part of that gap comes from tenure. People who invest tend to have held the account longer and contributed more aggressively along the way.
But part of it is plain math. Cash sitting inside an HSA usually earns under 1%, while an invested balance can track the stock market's long-run average of roughly 7% to 10% a year.
Compounded over 10 or 20 years, that rate gap turns into thousands of dollars. None of this requires picking individual stocks. Most HSA investment menus offer the same kind of low-cost index funds you would find in a 401(k) plan.
Run the actual growth numbers for your own contribution amount with our compound interest calculator before deciding how much cash to keep on hand.
Invest Now, Reimburse Yourself Later
The strongest HSA strategy is to pay small medical bills out of pocket today, save every receipt, and let the HSA stay invested for years or decades before you touch it. This works because the Internal Revenue Service (IRS) places no deadline on when you can reimburse yourself for a qualified medical expense. The expense just has to have happened after you opened the HSA, with a receipt or other proof of payment kept on file.
Try the math on a small example. Say you pay $2,000 out of pocket this year for a physical, some bloodwork, and a prescription refill, all HSA-eligible expenses under Publication 969. Instead of pulling that $2,000 back out of the HSA right away, you leave it invested inside the account and simply keep the receipt.
Assume that $2,000 grows at an average 7% a year, a common long-run assumption for a stock index fund. After 20 years it grows to roughly $7,740. You can reimburse yourself for that original $2,000 medical expense at any point, even decades later, completely tax-free, because the expense was real and the receipt proves it.
That leaves the remaining $5,740 of growth still inside the HSA, still invested, and still available for future medical costs or, after age 65, for anything at all. This is the triple tax advantage no other account offers. The contribution went in pre-tax, the growth was never taxed along the way, and the reimbursement comes out tax-free too.
What Changes at Age 65
Turning 65 removes the biggest restriction on an HSA. The 20% penalty for spending the money on anything other than a qualified medical expense disappears completely. Before 65, a non-medical withdrawal costs you ordinary income tax plus that 20% penalty, per Publication 969.
After 65, the penalty goes away, though income tax still applies to any withdrawal not spent on a qualified medical expense. That makes an HSA behave like a traditional individual retirement account (IRA) once you clear 65, at least for money spent outside of medical care.
Withdrawals used for qualified medical expenses stay entirely tax-free at any age, including well past 65. That is why many planners treat a large HSA balance after 65 as a second retirement account rather than only a medical fund.
How to Catch Up If You Are Behind
Catching up on a low HSA balance starts with the contribution limit. Investment strategy matters less than how much you actually put in each year.
For 2026, the IRS allows up to $4,400 in HSA contributions for self-only coverage and $8,750 for family coverage. Anyone 55 or older can add an extra $1,000 catch-up contribution on top of that.
Hitting your own age-bracket target usually matters more than which fund you pick inside the account. If your employer offers a match on the HSA itself, on top of any 401(k) match, take the full match first.
After that, many advisors rank maxing the HSA above extra 401(k) contributions. It is the only account with tax-free money going in, tax-free growth, and tax-free withdrawals for medical costs.
See how a higher monthly contribution changes your ending balance with our retirement calculator, and compare it against your 401(k) trajectory with our 401(k) calculator.
Who an HSA Balance Target Does Not Fit
An HSA balance target does not apply to anyone without a high-deductible health plan (HDHP), because that person cannot legally open or contribute to an HSA at all. Eligibility requires an HDHP that meets IRS minimums: a deductible of at least $1,700 for self-only coverage or $3,400 for family coverage in 2026.
If your employer only offers a traditional low-deductible plan, you likely qualify for a flexible spending account (FSA) instead, which follows very different rollover and ownership rules. Read HSA vs FSA to see which one actually applies to your plan.
This target also fits poorly for anyone already carrying high medical costs every year, such as someone managing a chronic condition with frequent specialist visits and prescriptions. Investing that balance and hoping not to touch it makes little sense when the money will clearly go toward bills within months. For that reader, a larger cash cushion inside the HSA is the safer starting point than an aggressive invested balance.
When the Invest-and-Wait Math Changes
The invest-and-wait approach changes the moment a major medical event forces a real, near-term withdrawal. A cancer diagnosis, an unplanned surgery, or a new chronic condition can turn a theoretical decision about growth into an urgent need for cash. No amount of compounding helps if the money is not liquid when the bill arrives.
When that happens, shift new contributions toward cash and, if needed, sell part of the invested balance to cover the expense. A tax-free withdrawal for real medical care is exactly what the account exists for.
The goal was never to avoid touching the money forever. It was only to avoid touching it before you had to.
If your HSA balance already looks close to your age bracket and nothing urgent is coming, the next step is simple. Check whether any of it is still sitting uninvested. Then move the amount above your cash cushion into the account's lowest-cost index fund option.
Frequently asked questions
What is a good HSA balance for my age?
A good HSA balance roughly matches EBRI's age-bracket averages: about $1,150 under 25, around $4,400 for ages 35 to 44, and roughly $9,000 at 65 and older. Balances that are partly invested run far higher, since Devenir found invested accounts averaging about $24,252 in 2025. Compare your own number to your age bracket, then decide how much of it should move from cash into investments.
Why is the average HSA balance so low?
The average HSA balance stays low mainly because most accountholders spend the money almost as soon as it arrives instead of investing it. EBRI found that only 18% of accountholders invested any part of their balance in 2024. The rest left their money in cash, where it earns very little and never compounds.
Should I invest my HSA or keep it in cash?
Invest any HSA balance beyond a small cash cushion for near-term medical bills, since Devenir found invested accounts run roughly 9.7 times larger than cash-only ones. Keep more in cash only if you expect real medical spending soon, such as a planned procedure or an ongoing chronic condition. Otherwise, uninvested HSA cash misses out on years of compounding.
What happens to my HSA at age 65?
At 65, the 20% penalty for non-medical HSA withdrawals disappears completely. You still owe ordinary income tax on any withdrawal not spent on a qualified medical expense, similar to a traditional IRA. Withdrawals spent on qualified medical care remain tax-free at any age, including after 65.
Can I pay medical bills out of pocket and reimburse myself later from my HSA?
Yes, and the IRS sets no deadline for doing it, as long as the expense happened after the account was opened and you kept the receipt. This lets the money stay invested and compounding for years before you ever withdraw it. Start by saving every medical receipt from this year, then run your own contribution amount through a compound interest calculator to see what waiting could be worth.
Sources
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