“`html

‘I’m Not Interested in Long-Term Care Insurance’: Retiring at 55 — What Will Healthcare Really Cost?

Retiring at 55 sounds like a dream, right? No more early alarms, endless meetings, or rushing through the workweek. Instead, you get to travel, maybe start a passion project, or simply take it slow. But here’s the big question that often gets overlooked: how do you cover healthcare for that decade before Medicare kicks in at 65? And what if you’re like a lot of folks who aren’t sold on long-term care insurance?

Medicare Waits Until 65 — That’s a Decade of Coverage on You

This is where a lot of early retirees get surprised. You can stop working at 55, but Medicare won’t cover you until you’re 65. So, for 10 years, you’re flying solo when it comes to healthcare—meaning you’re probably paying private insurance premiums, COBRA, or buying coverage through the ACA marketplace. Each option has its quirks, and the costs? They can add up fast.

The ACA Marketplace: The Most Popular Choice, But It’s Not Cheap

Most people retiring early end up here. The ACA marketplace is open to everyone, no matter your health history, which is a huge plus. But the price tag can sting. For a healthy 55-year-old, a silver plan premium in 2024 typically runs between $7,000 and $10,000 a year—just for the premium.

And if you’re married, double that. Want better coverage with lower deductibles? Gold and platinum plans will cost even more. On top of premiums, expect to spend another $2,000 to $5,000 a year on deductibles, copays, and coinsurance if you use healthcare regularly.

In my experience, couples can easily spend between $20,000 and $30,000 a year on healthcare before Medicare—making it one of the biggest chunks of an early retirement budget.

Subsidies Help — But They’re Tricky

The ACA does offer subsidies based on your income, not your savings or assets. This means if you’re living off savings, Roth IRA withdrawals, or selling investments, you might keep your taxable income low enough to qualify for big discounts.

But here’s the catch: managing your “modified adjusted gross income” (MAGI) can be a balancing act. Pull too much from investments or IRAs in one year, and you could lose your subsidies — leading to unexpected tax bills when you file.

I’ve seen even savvy investors get caught off guard here. So, if you’re planning on relying heavily on subsidies, make sure to work the numbers carefully or get help from someone who knows the ropes.

COBRA: Expensive but Sometimes Necessary

If you’re leaving a job with good benefits, COBRA lets you keep your employer’s insurance for up to 18 months. Sounds great, until you realize you’re paying the full premium—both your part and your employer’s share—plus a small admin fee.

That usually means $8,000 to $12,000 per person each year, which can feel steep. It’s worth it if you need continuity for ongoing care or treatments, but for most healthy retirees, it quickly becomes too costly.

Health Sharing Ministries: Lower Cost but Higher Risk

Some people turn to health sharing ministries, which are faith-based groups that share medical costs but aren’t technically insurance. Premiums are often much cheaper.

But these come with big caveats — they’re not regulated like insurance, can deny coverage for pre-existing conditions, and have limits on what they’ll cover. If you’re healthy and comfortable with some uncertainty, it might be worth considering. Otherwise, it’s a gamble.

HSAs: Your Secret Weapon

If you’ve been putting money into a Health Savings Account (HSA) while working, you’re ahead of the game. HSAs let you pay for qualified medical expenses tax-free, which is huge in early retirement. You can even use it for premiums if you’re on COBRA.

But a heads-up: unless you started early and invested well, most people don’t have a massive HSA stash by 55. Contribution limits are relatively low, so the balance might not fully cover a decade of expenses, but every bit helps.

Two Big Things to Watch Out For

• Health Issues Make It Costlier: If you have ongoing medical needs, expect premiums and out-of-pocket costs to climb. While ACA plans must cover you, those bills can be brutal. COBRA might help short-term, but after 18 months, costs can skyrocket again.
• Planning to Move Abroad? U.S. insurance won’t cover you overseas. Some countries offer expat insurance, but it’s often limited, especially if you have pre-existing conditions. And if you come back stateside before Medicare, you’re back to those high premiums.

Thinking of Skipping Insurance? Think Again.

It might sound tempting to ditch insurance if you’re healthy, but one accident or illness can eat through years of savings in a heartbeat. I’ve seen it happen more times than I’d like. It’s just not worth the risk.

So, What Should You Budget?

Here’s a rough estimate for a healthy 55-year-old going solo in 2024:

• ACA Silver Plan Premium: $8,500/year
• Average Out-of-Pocket Costs: $3,000/year
• Total: Around $11,500/year

For couples, double that to about $23,000/year. Multiply by 10 years before Medicare, and you get $115,000 to $230,000 just for healthcare. Subsidies can cut that number, but if you have medical issues, expect even higher costs.

The Elephant in the Room: Long-Term Care

You said you’re not interested in long-term care insurance — and honestly, most people feel the same way. It’s expensive, complicated, and the payoff isn’t always clear. I usually only see clients consider it if there’s a strong family history of dementia or similar issues.

But if you do need long-term care in your 50s or early 60s, be prepared to pay out-of-pocket — which can mean tens or even hundreds of thousands of dollars.

Wrap-Up

Retiring at 55? Totally doable. But don’t underestimate healthcare costs. I’ve seen even careful savers get blindsided when markets dip and healthcare prices climb.

My advice: plan for high premiums, keep a close eye on your taxable income to maximize subsidies, and never skip insurance. If you’re healthy, have a solid HSA, and stay on top of your finances, you’ll navigate this decade just fine. But it’s no time to be casual about risks — healthcare is one area where being cautious pays off.

“`