Healthcare options for pre-retirees

Hey Pete,

I’m 56 1/2 years old and my wife is 47 1/2. I’d really like to retire at age 62 1/2 and my wife would like to retire or semi-retire at that time also so we can move to a warmer climate. The big issue we have is the cost of healthcare. My research indicates that buying health insurance in the open market prior to age 65 is very expensive. When I researched this prior to Obamacare I found a policy to cover my wife and I for about $500 per month plus about a $5,000 family deductible with a total cost of about $12,000 per year. I was able to include an extra $1,000 in our monthly retirement budget and we were fine. Well, now that Obamacare has taken effect my research indicates that the least expensive plan I can find is a Bronze plan which will cost us about $1,200 a month with a $10,000 family deductible. A total cost of $24,000 a year. When I plug that into our estimated retirement budget it was very shaky for letting us retire when we want.

Is my research correct, or is there something I can do to find adequate healthcare cheaper?

Bruce

Bruce, I wish I could make your day, but I can’t. There are two major concerns for people when it comes retiring early: 1) having enough in savings to retire and 2) having proper healthcare coverage. Obviously from your question you are struggling with the second major concern. And it’s a big one.

Part of your issue is that you want to retire at age 62 1/2. When you retire prior to age 65 you take on the risk of high healthcare costs until you qualify for Medicare.

With the Affordable Care Act in place, your options are to play $1,200 for the lowest level of healthcare coverage or go uninsured. And as you can imagine, going uninsured is a terrible idea. Not only will you face tax penalties and fees, but you also risk your entire financial wellbeing in the event of a medical emergency or need.

If it makes you feel any better you aren’t alone. I’m 37 and less than a year ago my health insurance, which I paid for out of pocket as a self-employed person, was a comfortable $470 for a family of four with a $7,000 deductible. Then the Affordable Care Act happened and our plan was canceled. To get the same amount of coverage our monthly premium is now over $950. This is the reality of coverage today. Love it, hate it, or otherwise, that’s what it is.

Sadly, there isn’t always a way to make your financial dream a reality, sometimes you have to completely change course. Bruce, I also answered your question this week on The Pete the Planner Radio Show on WIBC, feel free to take a listen below.

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