Happy Friday Reader ☀️
Most people assume they have to work until 65 because of one thing:
Health insurance.
But the reality is many retirees stop working years earlier — and there are several ways they bridge the gap before Medicare begins.
One of the most common questions I hear from people considering retirement is this:
“If I retire before 65… what do I do about health insurance?”
Since Medicare doesn’t begin until age 65, it’s a legitimate concern. For many people, the fear of losing employer health coverage is actually one of the biggest reasons they delay retirement.
But the reality is that many people retire before Medicare — and there are a few common ways they bridge the gap.
1️⃣ Spouse Coverage
If one spouse continues working, the other can often remain on the employer health plan. This is one of the simplest and most common solutions for couples approaching retirement.
2️⃣ COBRA
COBRA allows you to continue your employer plan for up to 18 months after leaving a job. The downside is that you must pay the entire premium yourself, which can be expensive. Still, it can serve as a helpful short-term bridge while transitioning into other coverage options.
3️⃣ ACA Marketplace Plans
Many early retirees ultimately purchase insurance through the marketplace created under the Affordable Care Act, often through the federal exchange at HealthCare.gov.
This is where things become particularly interesting from a planning standpoint.
Premiums on these plans are largely based on income, and many households qualify for significant subsidies depending on their Modified Adjusted Gross Income (MAGI).
That means the way you structure your retirement withdrawals can influence what you pay for health insurance during those early retirement years.
For example, some retirees manage their income by:
• harvesting investments with a large cost basis, keeping taxable gains lower
• using Roth distributions, which generally do not count toward taxable income
• controlling IRA withdrawals to stay within certain income ranges
In some cases, retirees may even pause larger tax strategies temporarily.
For example, delaying significant Roth conversions for a few years may allow them to qualify for larger healthcare subsidies before Medicare begins.
The Big Takeaway
Health insurance before age 65 is something that should absolutely be planned for.
But for many retirees, it ends up being far more manageable than they initially expect.
And perhaps more importantly, it highlights a broader truth about retirement planning:
The way you structure your income can affect far more than just taxes — it can influence healthcare costs, investment strategy, and long-term financial security.
If you're exploring whether your current strategy is positioned correctly for retirement, you can learn more about the Retirement Income Review below.
Now as usual, all of the new resources (videos and blogs) of the week, are linked below. Enjoy!