The first place to check for coverage for early retirement is with your employer. One form of employer insurance is COBRA (which stands for the Consolidated Omnibus Budget Reconciliation Act that provides for this sort of protection). Under COBRA, retirees can continue their employee plans for 18 months. But they have to pay the full cost -- including the share their employers previously picked up -- not just what they paid as employees.
Policies that employers offer specifically to retirees are becoming a less viable option as more companies quash them. The Employee Benefit Research Institute reports that in 2000, only 12% of private employers were offering coverage to retirees younger than 65, down from 22% in 1997. When retirement was years away, this exercise may have involved a lot of estimates.
Now, you can be more accurate. Consider the following factors: Your home base, do you intend to remain in your current home? If so, when will your mortgage be paid? Will you sell your current home for one of lesser value, or "trade up"? The length of your retirement, the average 65-year-old man can expect to live about 17 more years; the average 65-year-old woman, 20 more years, according to the National Center for Health Statistics. Have you accounted for a retirement of 20 or more years?
Earned income, the Bureau of Labor Statistics estimates that by 2015, 10% of women and 20% of men aged 65 or older will still be employed. If you continue to work, how much might you earn? Your retirement lifestyle, your lifestyle will help determine how much preretirement income you'll need to support yourself. A typical guideline is 60% to 80%, but if you want to take luxury cruises or start a business, you may well need 100% or more.
Health care costs and insurance, many retirees underestimate health care costs. Most Americans are not eligible for Medicare until age 65, but Medicare doesn't cover everything. You can purchase Medigap supplemental health insurance to cover some of the extras, but even Medigap insurance does not pay for long-term custodial care, eyeglasses, hearing aids, dental care, private-duty nursing, or unlimited prescription drugs.
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