“The Biggest Retirement Lie: ‘I Can’t Retire Until Medicare’”

“I can’t retire until Medicare.”
It sounds responsible. It sounds practical. It also keeps a lot of people working years longer than they need to. 

The truth is not that health insurance doesn’t matter. It absolutely does. The mistake is believing your employer is the only safe way to get it. That belief quietly trades some of your best years for a sense of certainty that may not actually be required.

In this episode, James walks through a real case study of a couple in their late fifties who had the assets, the plan, and the desire to retire, but felt trapped by healthcare fear. When health insurance is treated like a gatekeeper, it stops retirement cold. When it is treated like an expense, something shifts.

Even after accounting for significant premiums before age 65, the plan still worked. The real cost was never the insurance. It was the six to seven years of freedom they were prepared to give up during their healthiest and most energetic phase of life.

Medicare is not permission to retire. A coordinated plan is. When healthcare is integrated into your strategy, retirement stops being about age and starts being about choice.

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Transcript

How Medicare Is Not The Gatekeeper To Your Retirement

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I'd love to retire, but I'm not 65 yet. I need my employer's health insurance coverage. Have you ever said that to yourself? On the surface, it sounds responsible. But here's the uncomfortable truth. That is the single biggest lie keeping you at a job that you no longer need. And in today's video, I'm going to show you how Medicare is not the gatekeeper to your retirement and what you can do instead to plan for your retirement with health coverage on your own terms. So to be clear, the lie is not the insurance matters. It absolutely matters. The lie is that you need it through your employer, and this lie keeps people working five years, 10 years, 15 years even longer than they otherwise need to. So I'm going to show you how real people retire before age 65 without having health insurance blow up their plan. Before we do so, let's just acknowledge reality. Health insurance is incredibly expensive. A bad year without proper planning can completely blow up your budget. And to add on to that, you have your coverage through your employer. It feels safe, it feels predictable. You know what the premium is. HR covers some of the details on the back end. And you can't imagine what you would do for coverage without that before Medicare kicks in. But don't fall for the myth that if you retire before age 65, health insurance is going to eliminate your ability to retire. Let's take a look at a case study to show what actually happens here. And then I'm going to show you some things that you need to understand so that you can retire on your terms, not simply because you've turned 65. So what you're going to see on the screen here is Carl and Sally. And you can see that Carl and Sally are 58 and 59 years old. You can see their net worth right here. They're in a strong position. They've saved, they've invested. You can see that between their IRAs, 875,000 and Carl's, Sally's has 720,000 in a joint account with almost 1.4 million. They have substantial assets that could put them in a position to retire. You can see here they have a property worth$625,000. One of the reasons they have this amount in their joint account is they're recently downsized. That recent downsizing really allowed them to have a lot more in liquid assets in their joint account that they can now use to retire. They also have their health savings account. So they're in a position where they have strong income sources, but they feel like they need to work until age 65. They feel like that primarily because, yes, they have the assets to cover some of their expenses, but what the heck are they going to do for health insurance? So age 65 Medicare kicks in, of course. Their goals you can see here of spending$7,000 per month on core expenses plus an additional$30,000 per year for travel. So let's take a look at where that gets them. If they work until 65, you can see that here they are today. They continue growing their assets. They have a closer to$5 million in their portfolio by that point. And then they retire. And not only do they retire and have then enough to get through retirement, their assets actually continue to grow throughout retirement to the point that in today's dollars, meaning adjusted for inflation, the real purchasing power, they have significantly more assets then than they do now. Now, here's why that's important. They want to retire now. They want to retire sooner. But much like you, their concern is, well, what are we going to do for health insurance? What are we going to do for health insurance if a major health event comes through? Is that going to wipe out our budget? Is that going to wipe out our ability to do so? So instead, fear kicks in and they work six, seven, eight more years that they don't really need to. Let me show you why. I mean, they don't really need to. If I come down here, I can show you what happens if they retire. And keep in mind, Carl's 58, Sally's 59. What happens if they retire today? So Carl at 58, and he still's living to 90 in this projection. Sally is retiring at 59. So again, this is what I'm illustrating for them. And just as a reminder, this is not financial advice. This is for educational purposes only, but it's going to illustrate a point that really unlocks a lot of freedom for a lot of people. And by the way, if you want access to this very same software, you can get access in the Retirement Planning Academy below. But what I want to show you is what's actually possible. So Carl and Sally, they retire six, seven years earlier than they were initially planning to, because I'm telling them or I'm showing them you don't actually need your employer for health insurance. You need to fire your employer. Fire your employer, meaning you need to understand what benefits do you get from your employer and how do you shift those to getting them on your own, to you having full agency over this. One of the main benefits that your employer offers is health insurance. So look at this. Yes, you retire early. Of course, there's fewer dollars left over in your plan. But Carl and Sally, if you look at your previous probability of success with your financial plan, you were at 100%. Even retiring six, seven years early, you're at 99%. But we haven't factored in health insurance yet. That is what's getting them tripped up. So let's go back here. What if we take a look at health insurance? Now we have a partner at Root Financial where we actually bring them in and we coordinate with understanding based upon your income sources, your tax history, the state that you live in, a variety of other factors. What's the best insurance plan for you to bridge the gap between now and age 65? So if you need help with us, reach out to us here at Root Financial to see how we might be able to help. But what I want to show them is what if it costs$40,000 per year in additional premiums to cover you between today, retiring now, retiring today, taking back control of your life and age 65 when Medicare kicks in. What would that look like? And I'll tell you, this is a big expense. There's no way around that. This is an expense. What I want to prevent is them viewing this as a gatekeeper, not simply another expense to be added to the balance sheet, to the profit and loss statement, to the cash flow statement. So what happens when we do this here? We show an additional$40,000 per year being added to their expenses. Big expense. But what does it do? Sure, there's a few fewer dollars left at the end of the day, but their probability of success is still at 98%. In other words, they can still absolutely do this. And I have seen people with millions and millions and millions of dollars who have that at a youngish age, in their 50s, early 50s, who are still working because of health insurance. So treat health insurance properly. Treat it like an expense, like you would a vacation, like you would groceries, like you would gas and fuel. Don't treat it as this thing that you have to get until Medicare age to start using. So if I go back to this, what's the real cost here? And it's not$40,000 like I'm showing you here. They can cover that. The real cost, based upon the way they're planning for it, probably based upon the way you are planning for it, is six to seven years of freedom. Six to seven years of freedom when they're at their youngest, the most vital, the most energized ages they have. They were ready to pack that in to say no to that so that they could continue working and get insurance coverage until age 65. So, real quick, let's go over actual true options. What do you do? If you leave your employer today and you're not age 65, what do you do for health insurance? Well, number one, take a look at Cobra. Cobra is going to allow you to maintain your employer's current coverage, except you're footing the bill instead of your employer. So if you love your plan, if you want that plan to continue, Cobra is an option. It's something that you can continue to use for several, several months going forward. So that's option one. Option number two is the ACA marketplace. This depends on what state you live in, what doctors do you want to have coverage for? This is where having a health insurance expert come in can really help. This is a big part of what we do at root in our Sequoia system process to really build out a comprehensive financial plan for our clients, bringing the right partners in to help you, to coordinate with you, to understand based upon tax situation, based upon the state you live in, based upon the coverage you need, what's the right plan to ensure you can step away from work and start doing what you want to do, but not have a gap in your coverage and not leave yourself overexposed to a health event from either a health standpoint or a financial standpoint. And then beyond this, there's also private plans. These are plans that aren't technically insurance, but they're cost sharing networks. Many people utilize those, and that can be very effective depending upon your situation. But understand that between Cobra, between ACA plans, between private plans, there are options out there to allow you to bridge the gap between leaving your employer and starting Medicare. And here's a bonus option. Those three options are perfectly fine. Another option to consider, especially if you somewhat like work and want to keep working, shift to part-time. Shift to a job that allows you to fully do what you want to do. Maybe it pays a whole heck of a lot less money, but you maintain your coverage. There's options, there's different ways to do this, but don't let health insurance be the blocker between you and living the life you want to live. So as we wrap this up, the real cost of waiting until 65 isn't health insurance premiums. It's your health, it's your energy, it's your freedom to enjoy those pre-65 years that most people feel completely trapped in because they think they need to get to 65 to actually have health insurance coverage. If you have a plan, if you have a strategy, health insurance simply becomes another line item in that that allows you to live the life you want to live.