Early retirement should not be a stressful experience. However, there are some important things to consider when making this complete lifestyle change. Health insurance is one of those issues.
Even if you have been healthy for most of your life, there is an increased likelihood that during your elder years health issues will surface and health care costs will increase. If you feel that you are financially ready, be sure that you have factored any unforeseen medical costs into the equation. If your early retirement plans are not a matter of choice and medical insurance is an issue, consider the following options:
If the idea of early retirement is suggested by your employer and includes medical coverage, make sure you understand fully what that coverage entails. How long will you be covered? Is the coverage adequate and affordable? You might be responsible for more cost than you can easily afford when you calculate all of the other expenses of retirement.
COBRA health coverage is available to individuals whose coverage is lost due to specific events. While you will be responsible for the full cost of the coverage, it may be less expensive than seeking individual coverage. Unfortunately, COBRA only extends coverage for 18 months for most workers. If you are retiring well before age 65, you will need another option to fill this gap.
If you are married and your spouse is continuing to work, examine the possibility of being added to their policy. You might want to time your retirement to coincide with their open enrollment period.
After exploring all of your options, if you do decide to retire before age 65, ensure that you are well prepared, in addition to being well covered.