How to retire at 60 and afford health insurance?


Editorial team Published on

Retire at 60 by bridging the five-year healthcare gap until Medicare begins at 65 using subsidized Marketplace plans, COBRA, or spousal coverage.

Main Health Insurance Options at 60

  • Affordable Care Act (ACA) Marketplace: Shop for plans on HealthCare.gov. Retiring counts as a qualifying life event, giving you a special enrollment window.
  • Spouse's Employer Plan: Join a working spouse's group plan if available. This is often the most cost-effective choice.
  • COBRA: Continue your former employer's coverage for up to 18 months. This keeps your current doctors and deductibles, but you pay the full premium plus a 2% fee.
  • Part-Time Work: Take a flexible job that offers health benefits to cover the gap years.

How to Afford Coverage Using Income Strategies

  • Manage Your MAGI: ACA subsidies depend on your Modified Adjusted Gross Income (MAGI), not your total assets.
  • Use Roth and Cash Accounts: Withdraw from Roth accounts or taxable cash reserves instead of large traditional IRA/401(k) distributions. Roth withdrawals do not count toward your MAGI, which helps keep your reported income low.
  • Drawdown Strategically: Spread out traditional retirement account withdrawals over multiple years or wait until Medicare to avoid large taxable spikes that reduce your premium tax credits.
  • Leverage HSAs: Use pre-tax funds from a Health Savings Account (HSA) to pay for medical expenses tax-free.