How much does healthcare cost if I retire before 65?

For the years between employer coverage and Medicare at 65, most early retirees buy ACA marketplace plans. Sticker prices climb steeply with age — a 62-year-old pays roughly three times a 25-year-old's premium for the same plan. COBRA can bridge up to 18 months at full group cost plus 2%, and is sometimes worth it mid-year to preserve a met deductible; after that, the marketplace is usually the only game in town.

Premium tax credits are computed from your household's modified adjusted gross income. A couple drawing spending money from cash and taxable savings can report modest MAGI and qualify for substantial premium help; the same couple funding identical spending from a traditional IRA may pay full price. Sequencing withdrawals around subsidy thresholds can be worth thousands of dollars a year during the bridge.

Mind the cliff: with the enhanced pandemic-era credits expired, subsidy eligibility ends at 400% of the federal poverty level — cross the line by a single dollar and the entire credit can vanish for the year. If you're managing income near the threshold — say, doing Roth conversions in a low-income year — model it before you act, and verify current rules at healthcare.gov since Congress has changed them more than once.

Medicare replaces the marketplace at 65 but still costs real money: Part B and D premiums plus out-of-pocket expenses typically run several thousand dollars per person per year, and higher incomes pay IRMAA surcharges based on your tax return from two years earlier. A complete plan models the full sequence — bridge premiums, subsidies, Medicare, IRMAA — year by year, so healthcare stops being a guess.