Planning to Retire Early in 2027? Make This Move First

Many people hope to leave the workforce early. If you have saved enough for retirement, you may be able to step away sooner than most.

Early retirement can give you more time for hobbies and travel while you still have the health and energy to enjoy them. But before you retire early, you should first determine how you will get health insurance and what it will cost.

Key points

• If you retire before age 65, you may not qualify for Medicare yet.

• Health insurance may cost more than you expect.

• Skipping coverage could turn into an expensive mistake.

Why going uninsured is risky

Medicare generally becomes available at age 65. If you plan to stop working before then and do not have access to a spouse’s employer plan, you will need to secure coverage on your own.

Even if you are healthy, it can be tempting to go without insurance. That is usually a poor choice.

A single emergency room visit can lead to medical bills worth thousands of dollars if you are uninsured. Even a basic policy is better than having no coverage at all.

Coverage options to review

Early retirees have several insurance options, but none of them are likely to be inexpensive. COBRA can let you keep your employer coverage for a limited period, usually 18 months. Because you would pay the full premium without an employer subsidy, the cost can easily reach hundreds of dollars each month.

COBRA may make sense if you only need coverage for 18 months or less before Medicare starts and you can afford the payments. It lets you stay with the plan you already know.

If that is not an option, you may need to look at private insurance or an Affordable Care Act plan. Costs depend on the plan and the coverage area, so comparing plans is the best way to understand what you will pay.

It is wise to do that research before you retire early. If health insurance turns out to be much more expensive than expected, your budget could take a serious hit.

If the price is far higher than you can manage, you may want to delay full retirement and consider part-time work instead. That could help you keep workplace health coverage a little longer and make the transition less stressful.