Do you want to retire early? Whether you want to join the FIRE (financial independence, retire early) movement or you just want to try to free up your time earlier than standard, planning is key to success. And one of the biggest obstacles early retirees must overcome is health insurance. Why is conquering this challenge so important? And how can early planning help you do so? Here's what you need to know.
Why Health Insurance Matters
Early retirees are generally in better health than those who retire at a more traditional age. But accidents and illnesses can happen at any time. Many people cannot absorb these unexpected costs, and it may cause bankruptcy or eat into their financial reserves. And because most Americans' health insurance is tied to their jobs, losing that job leaves you suddenly vulnerable.
Depending on how early you want to retire, you may face years or even decades without job-based health insurance. And draining your retirement funds before you qualify for Medicare could result in outliving your retirement nest egg.
Why Early Planning Matters
Every early retiree must put more time into retirement planning at a younger age. This must include health insurance planning. Why? First, you need to know how much extra you will need to put aside to cover insurance and out-of-pocket costs later on. The only way to know this is by researching it before you need to access it. And the more time you have to adjust your saving rate, the better.
The good news is that boosting savings to pay premiums isn't your only option. There are a number of ways to access various health insurance options.
For instance, you can choose from the private market, health care state exchanges, industry programs, and different coverage choices. You may be able to find work in a setting that offers retiree benefits or in which one spouse's employer covers the other spouse. You might take advantage of COBRA rules. Or perhaps you can work part-time after retirement to pay for health insurance during the gap years.
Many of these choices, though, take time to implement. Finding the right employer or industry to extend benefits, for example, could take years to implement. So you want to start working toward such a goal when you still have years to plan.
Where You Can Get Help
Solving the health insurance gap is a major challenge. The best place to begin is by meeting with a medical insurance agent in your state. With their expertise and resources, you'll learn about all your options and choose the best route for your circumstances. Make an appointment with a health insurance plan specialist today to get started.