One of the most vexing problems for people who want to retire early is what to do about health insurance. The US is an employer based health system; most health insurance is provided by employers. It is very difficult and expensive to purchase health insurance outside of this system if you are under age 65. While there aren’t any easy answers to this problem, there may be an option for you.
Consider reducing your hours at your job instead of quitting – in many companies, you can keep your health insurance if you work 25 hours per week or more. This can be a HUGE cost savings compared to having to buy it on the open market. This 40% reduction in your working hours will also make a huge impact on your life, as you will have tons more time to do the things that really matter.
Another benefit of this approach is that you can contribute all your net income (up to the $19,000 2019 limits; $25,000 if you are over 50) to your 401(k)/Roth 401(k) or other benefits, such as ESPP or HSA.
For those of us over age 50, leaving our job completely can be scary. Often times our identity is tied up in our job. Reduces our working hours by 40% can provide us the opportunity to ease into retirement, while also keeping ourselves insured.
People who retire early — before age 65, when Medicare eligibility begins — need to find a health insurance option that can cover them in the meantime. Even if you don’t retire too early for Medicare, a younger spouse might need coverage to bridge the gap until he or she can qualify, too. Thanks for sharing this great information.