Beyond Your 401(k): Strategic Wealth-Building for High Earners Who Should You Max Out Your HSA and Other Retirement Accounts?

When you’ve maximized your 401(k) contributions, the next chapter of retirement planning opens up. While most Americans never reach this milestone, those who do face an important question: where should the additional money go? Financial experts agree that a diversified approach—combining multiple retirement vehicles—creates a more robust long-term wealth strategy than relying on a single account type.

The IRA Alternative: Your First Move After 401(k) Maximization

Beyond workplace retirement plans, Individual Retirement Accounts (IRAs) represent a critical building block. The distinction between traditional and Roth IRAs offers flexibility based on your current tax situation and future projections.

With a traditional IRA, you receive immediate tax deductions, while a Roth IRA allows your contributions to grow tax-free throughout retirement. The beauty of this approach? You don’t have to choose one over the other. For 2024, high earners can contribute up to $7,000 annually to an IRA ($8,000 if you’re 50 or older), all while maintaining an active 401(k). This layering of retirement accounts creates multiple streams of tax-advantaged growth.

Brokerage Accounts: Unlimited Flexibility Without Tax Breaks

A taxable brokerage account offers something that restricted retirement accounts cannot: complete control without contribution limits or income thresholds. Investment firms and brokerage houses provide these accounts to investors seeking exposure beyond qualified retirement plans.

The tradeoff is straightforward—you’ll pay capital gains taxes on investment growth. However, this tax burden comes with significant advantages. Unlike 401(k)s and traditional IRAs, brokerage accounts have no required minimum distributions (RMDs). This means you can let your investments grow indefinitely without government-mandated withdrawals at age 73. The flexibility extends to early access—you can withdraw funds anytime without penalties, making brokerage accounts ideal for those under 59½ who need portfolio liquidity.

Real Estate: Diversifying Into Alternative Investments

Alternative investments like real estate provide portfolio diversification and potential inflation protection. Rental properties, when structured carefully, can generate recurring income and appreciate over time.

However, this path demands serious commitment. Property ownership requires substantial upfront capital, ongoing maintenance costs, property management time, and emotional resilience through market cycles. Financial advisors recommend entering real estate with a paid-off primary mortgage, professional real estate guidance, and cash reserves to prevent debt accumulation. This isn’t a passive investment—it demands active participation and expertise.

Should You Max Out Your HSA? The Overlooked Retirement Secret

Many high earners overlook the Health Savings Account (HSA), yet it’s arguably the most tax-efficient retirement vehicle available. Unlike FSAs or other health accounts, HSAs permit unlimited rollover of unused balances, creating a true long-term investment tool.

For 2024, individuals with self-only coverage can contribute up to $4,150 annually, while family plan holders can save $8,300. These contributions are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses escape taxation entirely—a triple tax advantage no other account provides.

The strategic insight: should you max out your HSA? Absolutely. After age 65, your HSA transforms into a traditional IRA-like vehicle. While non-medical withdrawals become taxable (similar to traditional IRAs), the account’s flexibility dramatically increases. This means HSAs serve dual purposes—immediate medical expense coverage and future retirement income—making them ideal for wealthy individuals with high deductible health plans.

Layering Your Retirement Strategy

The path forward for those who’ve maximized their 401(k) isn’t about picking one option—it’s about layering multiple vehicles strategically. IRAs provide tax-advantaged growth with income flexibility. Brokerage accounts offer unlimited access and contribution capacity. Real estate adds diversification and inflation protection. And HSAs, if maximized, deliver unparalleled tax efficiency for both current medical needs and future retirement withdrawals.

This multi-pronged approach transforms excess income into sustainable, tax-efficient wealth accumulation across retirement timelines.