Strategies for Retiring Before 65

Retiring before 65 can be challenging, particularly due to the high cost of health insurance, but there are several strategies to consider:

Premium Tax Credits: Depending on your income, you may qualify for subsidies to lower premiums significantly. Since you're retiring and likely won't have a high income from work, you can adjust your income strategically by withdrawing minimally from your 401(k) to stay within subsidy limits.
Plan Options: Plans vary in cost and coverage (Bronze, Silver, Gold, Platinum). A high-deductible plan combined with a Health Savings Account (HSA) might be more affordable.
Stability Concerns: While you may worry about political changes, healthcare.gov and state exchanges are deeply entrenched and unlikely to disappear soon. It’s worth exploring as an option.

If your wife is still working, she could add you to her employer-sponsored plan. It may cost extra but is often cheaper than individual coverage.

COBRA allows you to stay on your employer’s plan for up to 18 months post-retirement, but it can be expensive since you pay the full cost. This could bridge the gap until you explore other options or qualify for Medicare.

Some employers, like big-box stores (e.g., Costco, Home Depot), offer health insurance to part-time employees. Working part-time could help you stay insured at a reduced cost.

Some organizations offer group health insurance plans to retirees. Check if your industry association or union has retiree options.

These plans are cheaper but offer limited coverage and aren’t compliant with the ACA. They could be a stopgap solution if you’re relatively healthy.

If you live in a state with expanded Medicaid and your retirement income is modest, you may qualify for Medicaid coverage.

Faith-based organizations offer cost-sharing programs for healthcare expenses. These are not insurance but can be significantly cheaper. Make sure to understand their limitations.

With your pension and 401(k), consider increasing your retirement savings or reallocating funds specifically for healthcare costs. This may include using HSAs if you’re still eligible to contribute.

Visit healthcare.gov to explore available plans and subsidies. Try using their subsidy calculator to estimate costs based on your anticipated retirement income.
Speak with a financial planner specializing in retirement and healthcare costs to optimize your income for ACA subsidies.
Consider talking to a health insurance broker to help you navigate options specific to your situation.

Retirement before 65 is achievable with careful planning and budgeting for healthcare, even with rising costs.