Participants in health savings accounts generally save twice as much in their 401(k) accounts than non-HSA participants, Fidelity announced Monday. In a study of Fidelity plans, the average 401(k) balance at the end of 2010 was $71,500, but the average balance for participants who were also contributing to an HSA was $170,500.
While the study did not break this behavior down into causality, William Applegate (left), vice president of Fidelity Investments, pointed to two trends that he believes are behind the higher average balances among HSA participants.
First, “people are contributing to both an HSA and a 401(k),” Applegate told AdvisorOne. “We believe they better understand and embrace the benefits of tax deferment and long-term savings. To say another way, they may just be better savers overall.”
Participants’ higher average account balances were present across all compensation levels. HSA participants who earned between $20,000 and $40,000 saved 59% more in their 401(k)s than their non-HSA cohorts. HSA participants who earned between $100,000 and $150,000 saved 64% more than workers who didn’t participate in an HSA.
“Behavior was consistent across all income levels, so it wasn’t just that people had more money to save, but they were saving more significantly both in their HSA and their 401(k),” Applegate noted.