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Final Push Before Retirement: Boosting Savings & Managing Medical Costs

January 5, 2026 | TS Prosperity Group

Our team at TS Prosperity Group remains steadfast in providing clarity and confidence during times of change. We created the “Preparing for 2026 & Beyond: Tax Code Updates” series is to provide a depth of knowledge from those you’ve come to know and trust, and to view tax updates as more than a policy change--but as an opportunity with fiduciary-focused recommendations to help you DO MORE for your future.

Part Four -“Final Push Before Retirement: Boosting Savings & Managing Medical Costs”

This article focuses on how the One Big Beautiful Bill Act (OBBBA) changes give a boost to pre-retirees who are still in the savings stage for retirement. Clients concerned with health care costs, long-term care, and maximizing late-stage contributions along with those who can itemize their medical deductions may find this post helpful.

For those who are still 15 or less years away from retirement know that every dollar counts—and every tax break matters. The OBBBA delivers targeted benefits for those looking to maximize savings and manage health care costs in the years leading up to retirement.

SECURE 2.0 Act + OBBBA = Stronger Financial Futures

Even though OBBBA didn’t make any changes to IRAs and other retirement plans, and the SECURE 2.0 Act is the driving force behind the reshaping of the retirement landscape, it’s worth noting how the increase of cash flow from OBBBA indirectly offers opportunities that can strengthen a pre-retiree’s financial future when paired with SECURE 2.0.

In 2022, SECURE 2.0 introduced tiered catch-up contribution limits for pre-retirees in certain retirement plans. There’s a “catch-up” contribution for those age 50-59, which allows for an additional $7,500 employee contribution, totaling $31,000 per year. And then there’s a “super catch-up” contribution for those age 60-63, which allows for an additional $11,250 employee contribution, totaling $34,750 per year.

However, it’s important to mention two things: 1.) employers aren’t required to offer these catch-up and super catch-up contributions, so check with your plan sponsor to ensure your plan does allow for these catch-up contributions to be made. 2.) once an individual reaches age 64, the “super catch-up” contribution is no longer offered, but reverts to the 50-59 “catch-up” contribution amount ($7,500 above the standard contribution limit of $23,000 per year).

Overall, for those age 65+, coupling the bonus senior deduction with maximized pre-tax retirement plan contributions can create a meaningful one-two punch—reducing today’s tax burden while super-powering tomorrow’s financial future.

Tax Benefits for Health Savings Accounts (HSAs)

HSA contribution limits have increased (2025: $4,300 for individuals, $8,550 for families; 2026: $4,400 for individuals, $8,750 for families), plus those who are 55+ can are eligible for an additional $1,000 catch-up contribution.

Furthermore, if you and your spouse are age 55+ and not enrolled in Medicare, you each can make another $1,000 HAS catch-up contributions to a separate HSA and those contributions can be a taxable deduction.

Enhanced HSA Eligibility

Prior to OBBBA, HSA eligibility was determined on a case-by-case basis for individuals and families who were covered by Bronze and Catastrophic plans under the Affordable Care Act (ACA). But now, those plans are eligible for HSAs, a big benefit for those who are using the ACA marketplace prior to their Medicare eligibility at age 65.

Also, those enrolled in Direct Primary Care (DPC) services can also qualify for an HSA (assuming their coverage is a High-Deductible Health Plan). This law allows HSA funds to cover DPC monthly fees, providing clarity surrounding DPC plan payment, that wasn’t there before.

Lastly, telemedicine will permanently be allowed to be utilized, whether the HDHP waives the deductible for telemedicine or not, and will not affect HSA eligibility.

In addition to the OBBBA providing retirees and business owners an increase in cash flow, having more giving power may mean you can enhance your legacy plans by:

  • Adjusting beneficiary planning in light of reduced income taxation.
  • Reconfigure gifting strategies for future generations while still alive.
  • Leverage trust funding for more tax-efficient transfers to future generations.

If you’re still building toward retirement or managing health care costs, stay tuned for our next post. We’ll cover how tax changes support late-stage savers and healthcare planning.

At TS Prosperity Group, we help clients adapt to changes using our Four Pillars of Financial Planning: investment planning, retirement planning, estate planning, and tax planning. We know that estate planning is more than reducing taxes—it’s about ensuring your wishes are carried out, your loved ones are provided for, and your legacy reflects your values. Now is the best time to review existing estate documents and strategies to remain optimal. Call us today for an estate plan review for peace of mind knowing your legacy is secure and your wealth is working the way you intended.

Investment products offered by TS Prosperity Group are: Not a Deposit • Not FDIC Insured • Not Insured by any Federal Government Agency • Not Guaranteed by the Bank • May Go Down in Value.