As you might already know, the earliest age at which you can claim Social Security benefits is 62. Of course, you will have to accept a permanently reduced payment if you claim your benefits before full retirement age, but many people either want or need to retire a bit early. This can be a viable plan if you have planned for another form of retirement income that will adequately support your lifestyle. But before you make the leap, you should consider one more question: What will you do about health care?
Contrary to popular belief, Medicare eligibility does not begin when you claim your Social Security benefits. You can’t receive Medicare until age 65, whether you’re retired or not. That means if you want to retire earlier than 65, you should put together a plan to pay for your medical expenses.
Some employers do provide retiree health benefits. If so, you might be in luck. But keep in mind that many employers are phasing out these plans, so you might not want to count upon it if you’re still several years away from retirement. The other thing to consider is whether this policy carries a high deductible or other limitations. It might not be identical to your current health care plan!
Another option is to purchase your own health insurance plan through the exchange established by the Affordable Care Act. You might even receive a subsidy to help with the cost of your premiums, depending upon your annual income and family size. Since premiums are likely to change from year to year (most likely increasing), it’s important to keep an eye on your prospective cost of health insurance in the year or two leading up to an early retirement. Carefully estimate your out-of-pocket expenses before making the final decision to stop working.
A few retirees take a risk, and go without insurance until Medicare eligibility begins. This is asking for trouble, because most of us experience some health problems in our 60s. At the very least, you will be delaying preventive care that could save your life if you receive it early enough. If you do experience a health emergency, you might be forced to drain your retirement fund to pay for expensive treatments.
It might be possible for you to retire early, before age 65 or so. But before taking the leap, call our office to schedule an appointment. We can review your plan together, and make sure you have covered all of the bases so that you don’t face unpleasant surprises later.
Portions of this article have been excerpted from “Health Coverage for Retirees”, healthcare.gov.
https://www.healthcare.gov/retirees/
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
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