Health Insurance Costs Threaten Early Retirement

More than ever, 50-somethings are envisioning an early retirement so they can pursue entrepreneurial dreams, travel, or reinvent themselves. Living the retired life before 65 sounds good… but it turns out many haven’t fully calculated what it takes to make it a reality.

These days, leaving the workforce typically means leaving your health insurance behind. And until Medicare kicks in at age 65, you’ve got to cover your own premiums or face the costs of uninsured medical treatment. The insurance you’ll need while you wait for the government to help foot the bill can range from $50,000 to $100,000.

And that’s a bill many hopeful retirees hadn’t planned on.

In fact, recent research by the Employee Benefits Research Institute (EBRI) has found 52 percent of workers 55 and up have less than $50,000 saved for retirement.

The non-profit institute also shed some light on Medicare — demonstrating it’s not the total comprehensive health insurance package retirees expect to lean on. It’s estimated individuals who live to be 90 years old will need to save over $200,000 by the time they hit 65 to cover supplemental Medicare insurance and out-of-pocket expenses during their retirement.

Is Early Retirement Out Of The Question?

Not entirely. But your options are limited without substantial savings in the bank. Here are a few things to consider:

• Is your spouse still working? If you retire while your spouse continues to work, you may be eligible for coverage through his or her employer’s plan.

• Can you keep your current plan? In some cases employers will allow you to keep the company’s plan even in retirement. The catch is you’ll likely have to pay the full premium.

• Shop for an individual plan. If you have serious health problems, you may have difficulty finding a plan that will accept you, or one that you can afford. If you are healthier, you may be able to find a plan that fits your budget. Consult with a health insurance broker about your options. These professionals represent several insurance companies and can “shop around” for the best deal to fit your individual situation.

If you’re anticipating an early retirement, find out if you can afford health insurance first. If you can’t, protect your savings from premature insurance costs so later on you can enjoy the comfortable retirement you deserve.