The short answer
For many people the biggest obstacle to retiring before 65 is not their nest egg but health insurance. Losing employer coverage means self-funding premiums during the highest-cost pre-Medicare years, and underestimating that expense is one of the most common early-retirement planning mistakes. The encouraging part is that ACA subsidies can dramatically lower the cost for retirees who manage their income, so the question is less whether you can afford it and more how you structure your income to make it affordable.
So health care is often the deciding cost of an early retirement, and it deserves to be modeled first, not last.
How to model the cost
Start by counting your bridge years to Medicare, then estimate a subsidized premium for each year based on the income you plan to draw. Because subsidies fall as income rises, your withdrawal strategy directly changes your premium, so model the two together. Include dental, vision, and out-of-pocket exposure, not just the medical premium. Our cost estimator and early retiree coverage guide help you build the estimate.
The key insight is that health-care cost and income strategy are linked — you cannot model one without the other in early retirement.
Building it into the plan
Once you have a realistic annual coverage cost, fold it into your broader withdrawal and income plan so it does not derail the retirement. Coordinating premiums, subsidies, and taxes is where professional planning helps most. Our retirement income guide covers how coverage fits into the larger picture of funding an early retirement.
The takeaway: decide when you can retire by starting with the health-care cost, then build your income strategy around keeping it affordable.
Frequently Asked Questions
Is health insurance the biggest cost of retiring early?
For many people, yes. Self-funding coverage during the pre-Medicare years is often the largest new expense, and underestimating it is a common early-retirement mistake.
How do I model health-care costs for early retirement?
Count your bridge years to Medicare, estimate a subsidized premium for each based on your planned income, and include dental, vision, and out-of-pocket exposure — modeling premiums and income together.
Can ACA subsidies make early retirement affordable?
They can substantially lower the cost for retirees who manage their income, since subsidies fall as income rises. That is why coverage and withdrawal strategy should be planned together.
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