rickyB01,
while my wife is on Medicare due to illness,
I'm retired, 63, and right in the spot you are worrying about.
And you should worry, the cost of medical insurance is a big part of our budget.
I budgeted 20K per year and while that covers the insurance, last year we had another
fifteen thousand out of pocket for medical.
so when you think of retiring early, you must also think total out of pocket medical expense,
not just insurance, because some policies cover more, some less, and you should budget on being sick
not healthy, because otherwise your finances will add to your physical woes and make things doubly unpleasant.
Now this is a conservative approach but then I'm conservative.
The stock market has been going up so nicely that in some ways I think we get lulled into complacency, thinking
it will just keep going. But it never does, and not very long ago the market and most of us suffered a huge loss of personal wealth.
So you have to plan on that scenario, or....buy a lower cost variable annuity with secondary guarantees that make sure your money will grow a minimum of x percent per year. All based on the claims paying ability of the insurer, so here's where you want to buy only from the largest and most secure companies. Basically you are paying a fee, think insurance, but it's not a premium, for a wrapper of investment protection layered over a traditional mutual fund smorgasbord to pick from. And usually you get to pick or you can let them put you on autopilot.
Lots of folk hate annuities. Think they are ripoffs. Some are, for sure. When I was a broker some promised huge commissions to me
if I sold their contract, and all I could think is how was it possible for this contract to be good for any of my clients if I was being paid this much?
It wasn't of course. I put a large part of my retirement money into an annuity with Mass Mutual, an old, large mutual life insurance company, seriously deep pockets, which is what you want because you want to be really sure there's enough money left when your turn comes around.
So if you want to be 99% sure you will have x amount of money in a liquid tax advantaged account, an annuity really does work.
Worked for me...when the market crashed and most folk were down thirty to forty percent of their investment account value, I knew mine was unaffected, just chugging along at 5%. Genuine peace of mind, for a worrier. And that isn't free, so there is cost/expense to this alternative.
I was very happy to pay it, and even though now the guarantee amount is less than the actual amount, because the market has risen so much, well, I'm totally satisfied with the experience taking a long view. But there certainly are other alternatives. Federally backed securities assuming they have any yield at all are always a good safe bet. And btw, I would never put more than one third of my investable assets
in an annuity. Diversification there too.
One thing always to consider, if you are close, but don't quite have the cigar, is to retire, but work two days a week doing something you like.
The extra income will go a long way to pay your medical insurance.
In retirement, it's all about income streams. Luckily the retirement calculators online make this pretty easy to do.
hope this helps.
