Key Points
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If you retire early, you may not be eligible for Medicare yet.
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The cost of health insurance could be higher than expected.
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Going without insurance could prove to be a huge mistake.
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Many people dream about retiring early. And if you’ve saved a lot of money for retirement, you may be in a place where you can end your career at a younger age than what’s typical.
Retiring early could allow you to enjoy things like hobbies and travel while your health is still strong enough to make the most of them. But if you’re planning to retire early in 2027, you shouldn’t move forward until you’ve figured out how to get health insurance — and what it will cost.
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Going without insurance is a big mistake
Once you turn 65, you’re generally eligible to enroll in Medicare. If you expect to retire before 65 and don’t have a spouse’s workplace health plan to join, you’ll need to figure out insurance on your own.
Now, if you’re relatively healthy, you might assume you can get away with skipping health insurance. But that’s a bad idea.
A single emergency room visit could leave you with thousands of dollars in medical bills if you don’t have coverage. So even if you only opt for bare-bones coverage, it’s important to have some type of insurance.
Options to consider
You have plenty of options to look at for health insurance as an early retiree, but don’t expect any of them to be cheap. COBRA generally allows you to keep your employer coverage for a limited amount of time, usually 18 months. With COBRA, you’re paying those premiums without a workplace subsidy, so they could easily cost hundreds of dollars a month.
COBRA may be a good solution if there’s a gap of 18 months or less until Medicare becomes available and you can afford the premiums. That way, you get to keep the coverage you’re familiar with.
Otherwise, your options may boil down to private insurance or an Affordable Care Act (ACA) plan. Prices can vary by plan tier and coverage area, so shopping around is really the only way to know what costs you’re in for.
But it’s best to do that research before you retire early. If you’re expecting health insurance to cost a lot less than it actually does, your budget could get thrown for a loop.
And if the numbers are downright shocking, you may want to hold off on full-fledged retirement and see if scaling down to part-time work allows you to keep your workplace health insurance for a few more years. It may not be optimal, but it could be your ticket to preserving your savings and making your life less stressful.
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