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Watch Out for the Retirement Health Care Gap

If you’re like most people, you can’t wait to retire! You might even feel so antsy that you’ve considered claiming your Social Security benefits early, at age 62. You probably know that your benefits will be permanently reduced from the full amount that you would have received at full retirement age (65 to 67, depending upon your year of birth). If you have saved enough money for retirement in some other way, perhaps in a 401(k) fund or Individual Retirement Account (IRA), you might not be bothered by this reduction in benefits.\r
However, you face one more hurdle to an early retirement: Have you considered what you will do about health care? Many people believe Medicare is tied to Social Security, and that they will receive Medicare when they retire and claim their Social Security benefits. However, this is a common misconception that could prove to be an unpleasant surprise if you decide to retire earlier than age 65.\r
In reality, you aren’t eligible for Medicare until age 65 – regardless of when you file for Social Security. That means if you retire earlier than age 65, you should consider how you will pay for health care expenses until you’re eligible for Medicare.\r
If your employer offers retiree health benefits, you might be one of the lucky ones. However, you should still check some important details about the policy before you count on it. Your plan could carry a very high deductible or co-pays. If so, you will need to factor those expenses into your expected retirement budget.\r
If you aren’t eligible for retiree benefits through your former employer, you should check the rates for an individual health insurance policy through our statewide exchange, Covered California. Thanks to the Affordable Care Act, you can purchase your own policy – but at age 62, the premiums might not be cheap. Depending upon your annual income, you might qualify for a stipend to help cover the cost of your premiums. But again, this is an issue you should investigate and plan carefully before you decide to retire early. Talk to a qualified insurance broker before you make any big decisions, so that you can enjoy good health and peace of mind once you finally retire.

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