Retirement · Healthcare bridge
Early retirement healthcare bridge.
If you retire before public health coverage starts, the gap years can be a real line item. Enter your own monthly cost and see the total and the lump sum to set aside.
Retiring at 50 and covering your own health costs until 65 means 180 months. At $900 a month, rising 3% a year, that totals $232,861, and about $172,555 set aside on the day you retire would cover it if it earns 4% a year.
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How the bridge cost is calculated
The bridge is the stretch between the age you stop work and the age public coverage begins. Each month in it costs your monthly figure, increased once per year by the rate you choose, counted from today. The amount to set aside is the present value of those monthly costs on your retirement date, discounted at the return you expect on that money, so it is less than the total.
Worked example. Age 45 now, retiring at 50, public coverage at 65: that is 15 years, 180 months. At $900 a month in today’s prices, the plain total is $162,000. With a 3% yearly increase, the first retired month costs $1,043.35 and the last $1,578.16, and the total is $232,861. Earning 4% a year on the money, the amount needed on the retirement day is $172,555.
Wikipedia’s FIRE article says healthcare before Medicare eligibility is a common concern for US early retirees and that early retirees in countries with universal health care, including Canada and the UK, do not face the same coverage barrier. The monthly cost is your input because premiums depend on age, location, plan and income. Use it for any health spending you expect to pay yourself, such as private premiums, drugs or dental. Add the result to your FI number.
Frequently asked questions
What is the healthcare bridge?
The years between retiring and the start of public health coverage, during which you may have to pay for insurance and out-of-pocket care yourself.
What monthly cost should I use?
A real quote for the plan you would buy, plus the out-of-pocket costs you expect. The $900 default is only an example.
When does Medicare start?
Per Medicare.gov, your Initial Enrollment Period is generally when you turn 65, lasting 7 months from 3 months before your 65th birthday.
Why is the amount to set aside lower than the total?
Money set aside on the retirement day keeps earning until it is spent, so you need less than the sum of the payments. Set the return to 0% to see the plain total.
Sources
Checked
Runs entirely in your browser. Nothing you type is sent or stored. Formulas are standard arithmetic; assumptions such as returns are yours to set.
Not advice
Estimate from your own inputs, not a quote or medical or insurance advice. Costs and coverage rules differ by country and plan.