Health Care Insurance is Just One Consider When You Retire Early
Transcript:
Katie Nealis:
I am retiring at 60. What should I be worried about compared to a normal retirement age?
Tom Vaughan:
Yeah, that’s a good question. So, you know, normal retirement age is an interesting question, you know, because that’s definitely changing in today’s world. You know, it used to be 65, it still is, to a large degree, still have a lot of people that talk about 65. But retirement is becoming kind of this flex concept, where, you know, maybe you just switch careers into something you like to do. And I guess I’ll call it financial independence is becoming a much more important concept. But if you do stop working at 60, versus say, 65, there are a few things to consider as far as that goes. I mean, one is just that, you know, Medicare is a pretty good program, it’s fairly inexpensive, especially compared to private insurance, and you do not qualify for Medicare until age 65. So if you’re going to retire at 60, you’re going to pay quite a bit more.
Now, two to three times more for your health care coverage, than you will once you get to be 65. And you qualify for Medicare. And for a lot of people, some of that is already being covered by work, you know, maybe they’re only paying for half of it, or what have you. And so, or even zero, some companies pay for all of the medical costs. And so that’s kind of a big shock, you know, you retire at 60. And what have you, it is important that you’re past 59 1/2 when you’re at age 60 or 59 1/2 is when you can start to get into your IRA type asset, your 401k type assets without any penalty, still have a tax on those. But that that’s a good piece you got past that, if you’re going to wait till age 60, I guess the other major aspect that you have to consider is just that your money has to last longer, whatever your life expectancy is, and how long you live, if you retire at 60, instead of 65.
Your money has to handle that five year, you know, window and be able to deal with that. And so, you know, that would be another aspect. So securities and otherwise, you’re not going to be adding to Social Security, you have to be taking in between 62 and 70. So if you’re not adding, you’ll have a little bit less, not a huge amount, but that’s somewhat of an impact as far as that goes. And, you know, those are some of the things that are off the top of my head, anything I’m missing here.
Easan Arulanantham:
I think we covered most of the and most of the stuff we can you know, if you have a financial plan, you can play with this age, you know, maybe six, you could retire two years earlier, if you’re willing to cut back a little bit more. Yeah. Or you can change up your plan just to fit your needs.
Tom Vaughan:
Yeah. Yeah, exactly. I mean, that’s one thing that’s nice about going through the financial planning the retirement planning process, is you can test out all these concepts. Because I guess the main thing wouldn’t be what’s different to me is just Can you do it? does it actually work? Do you have enough money? And are you willing to live at a lifestyle that will make that money lasts for the rest of your life? Because it becomes more acute. When you retire earlier? The later you retire, the less you’re going to be you know, putting pressure on your money. So yeah, that that would be the other thing I would take a look at is just you know, making sure that that financial planning process is in place. So you’ve got a good idea for what would happen.