For Mark Roberts’ use: Because 62 is the first age at which we can claim our Social Security benefits, many people plan to retire early. They do this even though their Social Security benefits will be permanently reduced from the full amount. This is sometimes a necessity, such as when a disability or illness prevents you from working any longer. In other cases, you’re just ready to escape your office. Whatever the reason for an early retirement, it can be a feasible option for some people – particularly if you planned for another form of adequate retirement income.
However, there is still one problem with retiring at 62: What will you do about health care?
Medicare eligibility begins at age 65, regardless of whether you have claimed your Social Security benefits. Therefore, those who retire earlier than 65 need to make another plan to cover medical expenses.
If your employer provides retiree health benefits, you could be in luck! However, these plans are becoming less common as rising insurance premiums force companies to make tough decisions. You might not want to count upon that plan still being there if you’re still several years away from retirement. If you do receive retiree health benefits, be sure to read the fine print: Your deductible might be much higher than your current plan, or the policy might carry certain limitations. Don’t count on it being identical to your current health insurance plan.
You could also purchase your own health insurance plan through the health care exchange. Depending upon your income and family size, you might even receive a subsidy to help with the premiums. If you plan to go this route, keep in mind that premiums do often increase from one year to the next, and you will still be subject to co-pays and deductibles. Remember to plan for all of these expenses when you create your retirement income plan.
A few daring retirees have taken the risk of going without health insurance until they reach Medicare eligibility, but we don’t advise going this route. You’re more likely to experience health problems once you reach your 60s, and delaying preventive care is not a good idea. Also, you could be subject to an unpleasant income tax penalty if you fail to purchase health insurance coverage!
In many cases, it is possible to retire at age 62. But because the cost of health care is rising rapidly, it’s a good idea to carefully consider how you will cover these expenses, so that you are never tempted to drain your retirement fund to pay for an emergency. Call us to schedule an appointment, and we can review your prospective retirement plan together, and help you prepare for any surprises that may occur along the way.