Early Retirement Harder Due to High Inflation and Healthcare Costs Before Medicare
High inflation, elevated interest rates, and surging healthcare premiums are making early retirement significantly more challenging, especially for those 1-5 years from retirement. Healthcare costs before Medicare eligibility at 65 now require budgeting $25,000-$35,000 annually for a couple, totaling up to $250,000 over a decade.
Source: 247 Wall St ·
Grace's Take
High inflation and rising healthcare costs are making it tougher for those nearing retirement to consider stopping work before age 65, as healthcare expenses could reach around $25,000 to $35,000 a year for a couple. It's important to adjust your retirement planning to account for these costs and possibly lower your annual withdrawal rate to 3% to ensure your savings last longer. Remember, while the road may seem challenging, planning for these factors now can help you feel more secure and prepared as you approach retirement.
- •Recalculate safe withdrawal rates to 3% for longer retirements
- •Budget $20,000+ yearly for pre-Medicare health costs
- •Housing lock-in effect delays relocations for cost savings
Near-retirees must de-risk portfolios further and bridge healthcare gaps with higher savings to avoid running out of money amid volatility and inflation.