Retiring at 62? Ways to Cover Health Insurance in Your Early Retirement (2023)

There are a lot of hurdles to overcome when figuring out how to retire early — before 65. However, early retirement health care is one of the most fiscally challenging. Medical care is going to be expensive no matter when you retire, but the picture is more serious for those who retire early, by choice or otherwise.
Retiring at 62? Ways to Cover Health Insurance in Your Early Retirement (1)

Medicare isn’t available until age 65 and self-insurance in your 40s, 50s, and 60s can be prohibitively expensive. Never mind that you typically face more health challenges as you age and are therefore more likely to use health care.

Use the NewRetirement Retirement Planner to find out now if you can afford an early retirement and explore the following 9 possibilities for how to cover early retirement health care costs:

1. Go Private

Private individual coverage may be your most expensive but most flexible insurance option. It is worth pricing this option and comparing it to other insurance.

2. Use Obamacare for Early Retirement

Whether you love the program or hate it, for a few years, Obamacare did make early retirement health insurance costs much more affordable.

One of the ideas behind Obamacare was that everyone could get insurance — preexisting conditions were not a factor. This was especially useful for people in their 50s and 60s — most of whom have had or are facing some kind of health issue.

While you can still get coverage if you have a preexisting condition, Obamacare insurance has gotten a lot more expensive and the future of the program is in flux.

(Video) Retiring early: How much your health insurance will cost

Many insurers have significantly raised premiums, in part because the Trump administration decided to stop payments to insurers that cover the discounts they are required to give to some low-income customers to cover out-of-pocket costs.

Nonetheless, if you are retiring early, it is still worth it to explore your Obamacare health coverage options on

  • Real Life Questions and Answers (including cost estimates for the Affordable Care Act) for Health Insurance Before Medicare Eligibility.

3. Early Retirement Health Insurance — Are you eligible for COBRA?

In certain circumstances, if you lose your job, you can still be eligible to benefit from your company’s group health plan for a limited period of time. “Using the Consolidated Omnibus Budget Reconciliation Act (COBRA), you can expect to be paying about 2% more than the full cost of health insurance on your old company’s plan,” says founder and CEO of Northwoods Financial Planning, Corey Purkat.

“It is going to be more expensive than if you were still employed at a company, but it will still be less expensive than paying for your health insurance on your own,” He says. “The only way someone wouldn’t be eligible for COBRA would be in situations where there was a very good reason a person was let go, such as a criminal investigation.”

Continuation coverage under COBRA is typically available for a relatively short period of time, typically 18 to 30 months.

4. Spousal Benefits Can Enable Insurance for an Early Retirement

An option that you may have if you are married is to use your spouse’s health insurance plan, Purkat explains.

“I see in many cases, one spouse may be retiring early, but the other is still working full-time,” Says Purkat. “This is a great situation because if you can cover the years before you turn 62 with your spouse’s insurance, it can save you a lot of money.”

5. Self-Fund with a Health Savings Account (HSA)

If you are retiring at 62 or before — or any time before Medicare eligibility at 65 and are really left with no other options — you can always self-insure, explains Purkat.

“Unfortunately, this can be the most expensive option,” He says. “But, if you have time on your side, I always recommend a Health Savings Account (HSA) to help with some of the high co-pays.”

An HSA is a good option, regardless of your age, and can be a huge help if you retire early and need funds to pay for the copays and what not before your high deductible health plan kicks in or other out-of-pocket health care costs.

(Video) Health Insurance For Early Retirement - Here Are 4 Options

One little-known fact: HSAs can also be used to cover most dental and vision costs!

“This type of savings account has triple tax benefits and also grows tax-free as you let it sit there,” Purkat says. “With this option, it makes it a bit easier for someone to self-fund their health insurance and then use funds from an HSA to pay for premiums and costs in-between times.”

Note that in order to be eligible for an HSA, certain criteria must be met. Before establishing and contributing to an HSA, please ensure that you are indeed eligible to do so.

Learn more about the many benefits of an HSA.

6. Insure, But Also Take Good Care of Your Health

The biggest thing to remember about early retirement, though, is to stay active and healthy, Purkat shares.

“The worst thing you can do in retirement is sit around the house all day,” He says. “Be sure to exercise, stay involved in your community or even work a part-time job. These acts will all contribute to your overall health and wellbeing and can help keep your health care costs lower.”

Studies have shown that staying physically active can also help fight off the onset of Alzheimer’s, the most common neurodegenerative disorder. This underscores the danger of a sedentary lifestyle.

7. Get a Part-Time Job with Benefits

An increasingly popular option for getting medical benefits for early retirement is a part-time job.

You can retire but find a low-stress gig somewhere that offers health care as a benefit to both part- and full-time employees.

There are fewer and fewer national companies offering these types of benefits, but check out the following companies who do offer health care to their part-time help. To qualify, you’ll need to work for a probationary period and usually commit to at least 20 hours a week:

(Video) How to Pay for Health Care if you Retire at 62?

  • Whole Foods (Must work 20 hours a week. Eligible after first 800 hours.)
  • Costco (20 hours/week. Eligible after first 180 days.)
  • Lowe’s (No minimum hours/week. Eligible within first 31 days of employment.)
  • Starbucks (20 hours/week.)
  • UPS (1 hour/week. Eligible after the first year of employment.)
  • JP Morgan Chase (20 hours/week. Eligible after 90 days.)

8. Explore Health Care Sharing Programs

Health care Sharing Programs are a very new phenomenon. These programs are defined by a group of like-minded people banding together to help pay each other’s medical expenses.

The most well-known health care sharing programs are Christian-based and a belief in the Christian faith is required to participate. (These health sharing programs are able to be formed based on legal religious exemptions.)

Dr. Jim Dahle, the White Coat Investor, describes the programs like this: “One option that one of my partners has used (for early retirement coverage) is to use one of the Christian health sharing ministry kind of options. This isn’t really health insurance but it’s similar to it, in that you can use it to help decrease the burden of unexpected health care costs.”

“The real benefit is it’s dramatically cheaper. Now, it doesn’t cover some things that health insurance covers. So, there’s some risk there but his theory is, if you develop something that’s terrible or some chronic condition, within a few months, you’ll be able to go on the exchange and buy an Affordable Care Act eligible policy and kind of hedge [your] bets that way.”

Here are some of the more popular Christian health care sharing programs:

AlieraCare may be more flexible and only require a statement of belief. You can be Christian, Jewish, Muslim, or non-denominational to participate.

9. Have a Good Overall Retirement Plan

Covering your health costs whenever you retire — early or late — is important.

Having an overall plan for how to fund retirement is absolutely necessary.

A really good retirement plan defines how much money you have now and in the future and it describes how much you are spending now and in the future. The NewRetirement Retirement Planner is an easy-to-use tool that helps you figure this out. This tool was recently named a best retirement calculator by the American Association of Individual Investors (AAII).

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How to get insurance when you retire at 62? ›

If you retire before age 65 without health coverage

If you retire before you're 65 and lose your job-based health plan when you do, you can use the Health Insurance Marketplace ® to buy a plan. The yearly period (November 1 – January 15) when people can enroll in a Marketplace health insurance plan.

How to retire early and have health insurance? ›

How to Get Health Insurance if You Retire Early
  1. COBRA.
  2. Retiree health insurance.
  3. Public health insurance marketplace.
  4. Spouse's health insurance.
  5. Medicaid.
  6. Private health insurance.
Nov 22, 2022

Can I get Medicare if I retire at age 62? ›

Can I get Medicare early if I retire early? If you retire earlier than age 65, you will not be eligible for Medicare. Although Medicare is often thought of as insurance for retired people, the Medicare age requirement is still 65.

What kind of insurance do you get when you retire? ›

Medicare is a U.S. government health insurance program. Medicare plans cover people aged 65 or older, people with some disabilities, and people with end-stage renal disease.

Why retiring at 62 is a good idea? ›

Your Social Security benefit is guaranteed to increase by 8% for each year of delayed claiming between your full retirement age and age 70. If you think you can beat that amount through other investments, you could receive more abundant financial rewards by taking Social Security early and investing the proceeds.

What happens if I retire at 62 and keep working? ›

You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits. If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount.

What to do if you have to retire early? ›

How to retire early: 5 tips for early retirement
  1. Refine your vision for early retirement. There's no one-size-fits-all approach to retirement. ...
  2. Set a savings goal. ...
  3. Don't forget fixed income earnings. ...
  4. Develop a savings plan. ...
  5. Stick to your plan—but make it flexible.
Dec 13, 2022

What to do when you can retire early? ›

A good early retirement investing strategy should be simple, focused on stocks, bonds, and real estate, and be executed consistently. You should have both a short-term investing (money you'll need in the next five years) and long-term investing (money you'll need in 10+ years) strategy.

What is the best way to retire early? ›

How to retire early in 5 steps
  1. Make some adjustments to your current budget. ...
  2. Calculate your annual retirement spending. ...
  3. Estimate your total savings needs. ...
  4. Invest for growth. ...
  5. Keep your expenses in check.
Jan 10, 2023

What is the average Social Security check at age 62? ›

According to the SSA's 2021 Annual Statistical Supplement, the monthly benefit amount for retired workers claiming benefits at age 62 earning the average wage was $1,480 per month for the worker alone.

How much is Social Security a month at 62? ›

The maximum benefit depends on the age you retire. For example, if you retire at full retirement age in 2023, your maximum benefit would be $3,627. However, if you retire at age 62 in 2023, your maximum benefit would be $2,572.

How do I get the $16728 Social Security bonus? ›

Who is eligible for Social Security bonus? For every year that you delay claiming past full retirement age, your monthly benefits will get an 8% “bonus.” That amounts to a whopping 24% if you wait to file until age 70.

Is it worth getting life insurance at 62? ›

If you retire with debt or have children or a spouse that is dependent on you, keeping life insurance is a good idea. Life insurance can also be maintained during retirement to help pay estate taxes. If you own cash-value life insurance, you'll want to consider any tax consequences of canceling the policy.

Does a 62 year old need life insurance? ›

Life insurance can be a necessary investment even if you are over 60 years old, since your financial goals and needs may be changing. For this reason, it's important to reevaluate your existing policies and financial situation as you enter your later years so that you are adequately covered.

Does Social Security offer retirement insurance? ›

Social Security's Retirement Insurance Benefits are federally funded and administered by the U.S. Social Security Administration (SSA). These are benefits that apply to individuals who have earned enough Social Security credits and are at least age 62.

How much can I make after I retire at age 62? ›

For the year 2023, the maximum income you can earn after retirement is $21,240 ($1,770 per month), without having your benefits reduced. The amount goes up each year. The maximum income limit doesn't change depending on your age; in other words, it's the same whether you're 62, 63, or 64.


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