Top Personal Finance Blogs
Friday November 24th 2017

Don’t Retire Early If It Means Going Without Health Insurance

Early retirement used to be a sign of prosperity, but nowadays, it seems almost foolish to try. There are no guarantees that the retirement income you have established today will be available tomorrow. Rates of return on investments are low. Add to that the difficulty of managing health care, and the outlook for early retirement looks bleak indeed.

Generally, we do not qualify for Medicare until age 65. That leaves a big gap for anyone wanting to retire at age 55. It’s important to look at all of your options and plan accordingly. If you have your heart set on retiring early, here’s what you need to know about making the most of health benefits available to you.

Piggy Back on Your Spouse

If your spouse has health insurance benefits through work and continues working, you may secure benefits that way. Generally, this works best if your spouse is a few years younger than you are. Otherwise, you may be in line for a spot of jealousy as your spouse comes home from the grueling grind every day only to find you relaxing in the sunshine. If your spouse just hasn’t reached retirement age, there is less chance of conflict.

Pensions

If your employer offers a good pension plan, you may be able to secure private health insurance cheaply until Medicare takes over. Such plans are becoming rare, as companies have begun scaling back benefits to meet ever-increasing demands for profits. Don’t assume the option isn’t there for you. Check into your pension plan and read it carefully. Some employers have been hoping to get away with denying promised benefits.

COBRA

Even if your pension does not include health insurance benefits, you can stretch those employer benefits out when you retire. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the typical employer must allow you to pay them to continue your health insurance coverage for at least 18 months. You benefit from the employer’s group insurance rate. Be sure to sign up within 60 days of separation or you may lose this option.

Individual Health Insurance

Once your COBRA eligibility period is over, you’re on your own until age 65. Under the Health Insurance Portability and Accountability Act (HIPAA), those who receive COBRA benefits can secure a certificate that allows them to bypass coverage problems that arise because of a preexisting condition. If your health is good, you might be able to get special coverage that is designed only for catastrophic illnesses. You pay for your annual checkups, prescriptions and routine care. The insurance kicks in for large expenses only after they exceed the deductible.

Going Without

You really shouldn’t consider this an option at all, even if that means paying for our own health insurance. Going uninsured, hoping you make it to age 65 when you can afford that life-saving surgery, is no one’s idea of a relaxing retirement. You’d be better of working and knowing you’re protected if you get sick.


Should You Pay Off Your Student Loans Early?

Should you pay off your student loans early? Absolutely! Paying off your student loans as soon as you possibly can is the best thing you can possibly do with your money. Tons of people graduate from college with thousands of dollars worth of student loans and completely forget or neglect to pay the money back once they are out college. This is one of the worst mistakes you can make. There are a number of reasons to pay your loans off as soon as possible.

Better Credit

First of all, paying your student loan as soon as you can will lower your debt to income ratio. This will allow you to have more money when you start to make important financial decisions later on down the road. Having a good debt to income ratio will allow you to afford a nicer house, car, and other objects you may desire. You may even be able to take the extra money afforded to you and invest it in order to start making even more money. Bottom line, the financial position you will be in later will be well worth the money you pay now.

Interest Savings

The longer you wait to pay your loans the more your loans will cost. Each month you don’t pay is more interest being added to the previous interest your loans have accumulated. The longer you wait to pay the more interest you will have to pay. The sooner you pay your loans the less you will pay altogether which could potentially save yourself thousands of dollars.

You’ve Got to Do it Sooner or Later Anyway

You cannot escape your student loans. You still have to pay your student loans even if you declare bankruptcy. Should your finances tank you will still have to climb back up with your student loans weighing you down. Paying your student loans early will allow you to deal with a financial crisis easier.

Most people start out with student loans as their only source of debt. Why not start your debt free life sooner than later by paying off your only source of debt as quickly as possible? You have nothing to lose and everything to gain from paying your loans right away.

Even if you can only pay off a portion of your loans you will still benefit more than not. Getting your finances in order as quickly as possible should always be your number one priority.