The #1 Concern of Retiring Before Age 65

Brian Fricke, CFP®Financial Planning, Insurance

The #1 Concern of Retiring Before Age 65

Congratulations! You’ve worked hard, planned and saved and now you’re able to do what very few people can: you are able to retire before you turn age 65. If you’re in this group, the single biggest concern you have now is health insurance.

Q. What do you do if you’re retiring before age 65 and going on Medicare?

Assuming your current employer has a health insurance plan in place and you are not working for a nonprofit, you will be eligible for COBRA. This is a federal law requiring all employers to make health coverage available to terminated employees including retirees for eighteen months after leaving your employer. The company can charge you no more than what their actual cost is plus another 2% to cover the administrative expense of providing the coverage to you.

Q. What happens at the end of eighteen months when COBRA ends?

If you and your covered family members are healthy, you have two options. You can convert the COBRA coverage to an individual policy from the same company or carrier that provided your COBRA coverage. Your other option is to purchase an individual health insurance policy.

Q. Why is health insurance so important?

While health insurance is costly, I cannot overestimate the importance of having a health policy. I’ve seen a lifetime’s worth of savings and investment portfolios of hundreds of thousands of dollars virtually wiped out by medical expenses in a very short period of time.
For more advice from experts in areas of retirement planning, check out Brian Fricke’s book, Worry Free Retirement.