Retiring Before Medicare? How One Couple Did It Without Breaking the Bank

Many people dream of retiring before age 65, but one of the biggest roadblocks is health insurance. Once employer coverage ends, and before Medicare begins, retirees are often left wondering how to afford health care coverage on their own.

We recently worked with a couple in Ohio who wanted to retire at 63. Their employer didn’t offer any retiree health insurance benefits, and like many others, they weren’t sure how they’d cover two years of medical expenses until they became eligible for Medicare.

The Retirement Strategy That Worked

After reviewing their finances, we helped them take a one-time withdrawal from their 401(k) right after they retired. This withdrawal gave them enough money to cover all their expenses for the next two years—without needing to show additional taxable income in 2024 or 2025.

But here’s the key part:We carefully sized that withdrawal so it filled up the remainder of their current tax bracket, without pushing them into a higher one. This kept their tax bill manageable while giving them access to the cash they needed.

Why It Matters for Health Insurance Subsidies

Because their income on paper for the following years was very low, they qualified for substantial health insurance subsidies through the Health Insurance Marketplace. They were able to get high-quality health coverage at a significantly reduced monthly cost, even though they weren’t yet eligible for Medicare.

This early retirement strategy is completely legal and well within the rules of both the IRS and the Affordable Care Act. It’s an example of how smart, customized retirement planning can open doors and save clients thousands of dollars.

Planning Ahead Pays Off

Retiring before age 65 doesn’t have to mean delaying your plans or draining your savings. With the right financial strategy, you can bridge the gap to Medicare with confidence, clarity, and cost-effective solutions.

At Ramsey Financial, we help clients think through every piece of the puzzle—from retirement income planning and tax strategy to health insurance and estate considerations.

Ready to explore your early retirement options? Schedule a consultation to see how our planning process can help you retire on your terms.