Beyond Your 401(k): Why Should You Max Out Your HSA and Other Smart Investment Moves

Once you’ve exhausted your 401(k) contributions, you’ve reached an important milestone in your wealth-building journey. But the next question becomes critical: where should your additional investment dollars flow? Financial advisory experts have long recommended a strategic sequence of moves beyond your workplace retirement plan. For high-income earners who’ve tapped out their 401(k) potential, the answer lies in understanding a layered investment approach that balances tax efficiency with growth potential.

The good news is that 401(k) plans aren’t your only retirement vehicle. A well-rounded financial strategy typically involves multiple accounts working in concert. The key is knowing which options deserve priority and why certain choices offer superior advantages for your specific situation.

Consider Individual Retirement Accounts: The First Natural Step

Once you’ve maximized your 401(k), individual retirement accounts represent a logical next destination. An IRA—whether traditional or Roth—lets you continue building retirement savings independently from your employer. The critical advantage here is flexibility: you maintain complete control over your investment choices, something 401(k) plans don’t always permit.

For 2026, you can contribute up to $7,000 annually to an IRA if you’re under 50, or $8,000 if you’re 50 or older. The traditional IRA offers an immediate tax deduction, reducing your current taxable income. The Roth IRA, by contrast, provides tax-free growth and tax-free withdrawals in retirement—a powerful advantage if you expect to be in a higher tax bracket later.

The beauty of this strategy: you don’t have to choose between a 401(k) and an IRA. They’re not mutually exclusive. You can simultaneously contribute to both, creating multiple tax-advantaged streams working toward your retirement goal. This account stacking approach has become increasingly popular among wealth-conscious professionals.

Explore a Brokerage Account: Unlimited Flexibility and Growth Potential

If your investment appetite extends beyond retirement accounts, a traditional brokerage account (sometimes called a taxable investment account) opens up entirely new possibilities. Unlike retirement accounts with contribution limits and withdrawal restrictions, brokerage accounts impose no caps on how much you can invest annually.

The trade-off is straightforward: you’ll pay capital gains taxes on your investment profits and income taxes on dividends. However, brokerage accounts offer compelling advantages that often outweigh this tax consideration. There are no required minimum distributions—a feature that allows you to keep your investments growing until you actually need the money, giving you far greater control over your tax situation in retirement.

Additionally, brokerage accounts have no income limits, no IRS restrictions, and no contribution ceilings. You can access your money whenever you choose without penalties. This makes brokerage accounts ideal for investors who’ve already secured their retirement foundation and want to build additional wealth beyond those protected accounts.

Should You Max Out Your HSA? A Hidden Gem for Tax-Efficient Wealth Building

Here’s where many high-income investors miss a significant opportunity: the Health Savings Account (HSA). While HSAs are officially designed to cover qualified medical expenses on a pre-tax basis, savvy investors recognize them as powerful wealth-building tools that work beautifully alongside other retirement strategies.

For 2026, individual coverage allows contributions up to $4,300 annually, while family coverage permits $8,550. The triple tax advantage makes HSAs particularly attractive: your contributions reduce taxable income, growth is tax-free, and qualified medical expense withdrawals are tax-free. For those who can afford to pay medical expenses out-of-pocket and allow their HSA to grow, this becomes a stealth retirement account.

The strategic brilliance of maximizing your HSA lies in its flexibility after age 65. Once you reach that milestone, your HSA essentially transforms into a traditional IRA. You can withdraw funds for any purpose you choose—not just medical expenses. Yes, you’ll owe taxes on non-medical withdrawals (just like a traditional IRA), but this flexibility means your HSA serves double duty: as a medical safety net during your working years and as an additional retirement fund afterward.

For wealth builders who should max out their HSA contribution, the positioning is clear: if you have the income flexibility to pay current medical expenses directly and invest your HSA contributions instead, this account type deserves priority in your financial strategy.

Diversify With Real Estate: An Alternative Asset Class for Serious Investors

Beyond traditional investment accounts, real estate represents a fundamentally different asset class that deserves consideration in a diversified portfolio. When approached strategically, rental property investment can provide inflation protection and meaningful returns. However, this isn’t a casual investment decision.

Real estate ownership demands significant capital, ongoing management, patience, and operational expertise. Before moving forward with rental property acquisition, ensure your personal residence mortgage is fully paid, you’ve established cash reserves for unexpected issues, and you’ve worked with experienced real estate professionals. Ideally, purchase properties with cash or minimal leverage to avoid overleveraging your wealth.

Real estate investments work best as a longer-term strategy, complementing your stock-based retirement and brokerage accounts. The combination of different asset classes—equities through retirement accounts and brokerage platforms, and real property through direct ownership—creates the diversification sophisticated investors need.

Building Your Complete Investment Architecture

The sequence matters less than understanding the full landscape of options available to you. After maximizing your 401(k), the journey continues through IRAs (tax-deferred growth), brokerage accounts (unlimited flexibility), HSAs (triple tax advantage), and potentially real estate (alternative diversification). Each serves a distinct purpose in a comprehensive wealth strategy, and the best approach depends on your personal circumstances, risk tolerance, and long-term objectives.