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Final Push Before Retirement: Enhancing Savings & Managing Medical Costs

January 5, 2026

At First National Bank and Trust Company, we continue to prioritize clarity and confidence as clients navigate an evolving financial landscape. As part of our “Preparing for 2026 & Beyond: Tax Code Updates” series, our goal is to provide trusted insight from the professionals you rely on—helping you view tax changes not simply as legal adjustments, but as opportunities to strengthen your financial future with informed, strategic action.

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

This portion of our series examines how updates in the One Big Beautiful Bill Act (OBBBA) support individuals who are nearing retirement and still actively contributing to their savings. Those who are concerned about rising healthcare expenses, long‑term care planning, or maximizing later‑stage contributions—especially individuals who can itemize medical deductions—may find these updates particularly beneficial.

For anyone within 15 years of retirement, every savings opportunity matters. OBBBA introduces provisions that can help pre‑retirees elevate their savings efforts while improving the way they manage healthcare‑related costs in the years leading up to retirement.

SECURE 2.0 + OBBBA: A More Powerful Path to Retirement Readiness

While OBBBA doesn’t directly change retirement plans or IRAs, its increased cash‑flow advantages pair strategically with the contribution enhancements created by SECURE 2.0.

In 2022, SECURE 2.0 established tiered catch‑up contribution levels:

  • Ages 50–59: Eligible for an additional $7,500 in employee contributions (bringing the total to $31,000 per year).
  • Ages 60–63: Eligible for a “super catch‑up” contribution of $11,250 (totaling $34,750 annually).

Two important considerations remain:

  1. Employers are not required to offer catch‑up or super‑catch‑up contributions, so it’s essential to confirm availability with your plan provider.
  2. At age 64, the “super catch‑up” window ends, and eligible participants revert to the standard $7,500 catch‑up amount (on top of the $23,000 annual contribution limit).

For individuals age 65 and older, pairing the expanded senior bonus deduction with maximized pre‑tax contributions can create a significant dual advantage: lowering taxable income now while strengthening retirement resources for the future.

HSA Advantages for Pre‑Retirees

The OBBBA also enhances the role of Health Savings Accounts (HSAs)—a valuable tool for managing rising healthcare expenses.

Higher HSA Contribution Limits

  • 2025: $4,300 for individuals | $8,550 for families
  • 2026: $4,400 for individuals | $8,750 for families

Those age 55+ may contribute an additional $1,000 catch‑up.

If both spouses are age 55+ and not enrolled in Medicare, each may contribute a separate $1,000 catch‑up to their own HSA—both of which may be eligible for tax deductions.

Expanded HSA Eligibility

Before OBBBA, certain healthcare plans—such as ACA Bronze and Catastrophic tiers—qualified for HSA eligibility only on a case‑by‑case basis. The rules are now clearer and more inclusive.

Newly eligible groups include:

  • Individuals and families using Bronze or Catastrophic ACA plans
  • Those enrolled in Direct Primary Care (DPC) arrangements, provided the associated insurance is a High‑Deductible Health Plan
  • Individuals utilizing telemedicine, which is now permanently permitted without affecting HSA eligibility (even when the deductible is waived)

Additionally, HSA funds may now be applied to DPC monthly fees, offering improved transparency and flexibility.

More Cash Flow = More Planning Power

The increased financial breathing room OBBBA provides for retirees and business owners can also support improvements in long‑term planning, including opportunities to:

  • Update beneficiary decisions to reflect reduced taxable income
  • Restructure lifetime gifting strategies for future generations
  • Use trusts to create more tax‑efficient multigenerational transfers

If you’re still building toward retirement or anticipating healthcare needs, stay tuned—our next post explores how these changes strengthen late‑stage saving and healthcare planning.

Guidance You Can Depend On

At First National Bank and Trust Company, we help clients respond to financial changes holistically through investment planning, retirement planning, estate planning, and tax planning.

We understand that preparing for retirement involves more than accumulating wealth—it’s about aligning your financial resources with your goals, your values, and your long‑term vision. Now is an ideal time to revisit your retirement and estate documents to ensure your strategy remains strong and up‑to‑date.

If you’re ready for a review or would like guidance on how these updates impact your future plans, our team is here to support you every step of the way.

Investment products offered by First National Bank and Trust Company are: • Not a Deposit • Not FDIC Insured • Not Insured by any Federal Government Agency • Not Guaranteed by the Bank • May Go Down in Value