“I Can’t Retire – I Need Health Insurance”

It is one of the most talked about reasons people refuse to retire before the age of 65. There are many reasons why someone may not retire, including lack of income, fear of running out of money, loss of identity, boredom, lack of a sense of purpose. Surprisingly, one of the biggest we come across is health insurance. As we grow older, the presence of health insurance becomes as much a necessity as income. Some see this as a higher priority, allowing insurance to dictate if/when they can retire.

You can start collecting Social Security at age 62 or at age 70. However, you can’t go on Medicare until age 65. The age gap between 62 and 65 is causing many pre-retirees to delay retirement until they can go on Medicare to make sure they have adequate health insurance. But this may not be necessary.

Enter Obamacare

On March 23, 2010, the Affordable Care Act (ACA) was enacted to ensure that all Americans had the right to health insurance. This new law came with a lot of criticism and confusion. At the time, many criticisms of the ACA were about the potential for higher premiums, low levels of coverage, increased taxes, and limited enrollment.

Twelve years later, we have a much better understanding of the ACA and how it can benefit all of us, including those under 65.

When we mention the ACA as an option to those who want to retire by age 65, the first reaction is usually not positive. People assume that insurance coverage is terrible and expensive. This is untrue. The ACA has matured quite well since its inception and gives you control over how much coverage you want and need.

The website for my state’s plan, www.nj.gov/getcoverednj/, provides New Jersey residents with a comprehensive and easy-to-understand list of coverage options. Providers are listed so you can make sure your doctor is in the networks. Plans are administered through companies you know, such as Horizon Blue Cross Blue Shield and AmeriHealth. The best part is that you don’t need a PhD. to understand the offers. Shocking, I know.

Residents in other states can learn about their options at healthcare.gov or find information about their state’s plan by visiting www.healthcare.gov/marketplace-in-your-state/.

The cost may surprise you – in a good way

The cost of health insurance through the ACA, however, is really confusing. This is another big deterrent to retiring before 65 without health care through your employer or your spouse’s employer. The monthly cost to you, the enrollee, is based on your expected family income for the year you need coverage. Here’s the good news: When you retire you may have little to no income.

For clients retiring before age 65, most of the money they live on first could be money in their checking/savings accounts or money outside of an IRA. These are their most liquid assets. If this is the case, when you apply for health insurance, your low income could result in your premiums being much lower than you expected. Your health insurance through the ACA can be at a significantly reduced cost – or maybe even free. In retirement, you can determine your sources of income. That kind of flexibility can help.

The registration process is simple. If you are planning to retire, this is considered a ‘life event’, which allows you to apply and enroll at the time of retirement.

Maybe retirement is finally within your reach

This is not an endorsement of the ACA, but a way to provide options and clarity on a topic that can be uncomfortably confusing. It’s annoying to see people spend their last working years trying to reach that magic number of 65. If they knew they had that option, maybe they would have enjoyed a few more years in retirement.

If you’re thinking of retiring before age 65, but think you can’t because of health insurance, we encourage you to explore this option. The websites listed above are easy to navigate and understand. We have seen this method used as an effective tool to help you retire earlier than previously expected.

We’re not health insurance experts, but we’ve seen the health insurance market mature nicely, and you could potentially benefit from it if you’re hoping to retire early.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), a subsidiary of Kestra IS. Reich Asset Management, LLC is not affiliated with Kestra IS or Kestra AS. The views expressed in this commentary are those of the author and may not necessarily reflect those of Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is recommended that you consult your financial professional, attorney or tax advisor regarding your individual situation. To view the CRS form, visit https://bit.ly/KF-Disclosures.

President and Founder, Reich Asset Management, LLC

T. Eric Reich, President of Reich Asset Management, LLC, is a Certified Financial Planner™ professional, holds the Certified Investment Management Analyst certification, and holds the Chartered Life Underwriter® and Chartered Financial Consultant® designations.

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