Financial Advisor Insights

Retire Early with Health Insurance: Closing the Coverage Gap

This article was written by Darrow advisor Kristin McKenna, CFP® and originally published by Forbes.

Retiring early is very difficult, but it can be within reach, especially for diligent savers with low expenses, individuals with a strong pension, and high-earning executives with substantial assets. Figuring out when you can retire at any age is driven predominantly by your expenses–not savings–so determining how much income you will require each year to support your lifestyle is the key component of the equation. Particularly for investors who wish to retire early (before Medicare coverage begins at age 65), estimating your health care costs and insurance options is a pivotal factor in determining whether your retirement dreams can become a reality.

Currently, there are five main options for retirees to obtain health insurance coverage before they reach age 65 and can enroll in Medicare:

  1. Employer-sponsored retiree health plans
  2. COBRA coverage
  3. Public exchanges established by the Affordable Care Act (ACA or ‘Obamacare’)
  4. Private insurance exchanges
  5. A spouse’s health plan if they are still working or if they have retiree health insurance coverage

These options vary significantly in terms of cost, availability, and plan coverage, so it’s important to understand the pros and cons in advance.

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