I retired at age 55 thinking my 20 year pension would be enough to cover my pre-Medicare healthcare premiums and other expenses until I reached age 65. I was wrong.
Retiring early has been great, but the expenses due to inflation have increased dramatically. So, thinking about retiring early? Think again.
Like every fall during open enrollment, I recently analyzed my healthcare plan and was shocked to learn my monthly premium was going up again. Inflation is really taking a bite out of my pension, but there is a silver lining.
The following chart shows the erosion that pre-Medicare healthcare premiums have had on my pension over the years.
Year Monthly Premium Monthly Gross Pension
2015 $131 $2,055.87
2016 $131 $2,055.87
2017 $170 $2,055.87
2018 $210 $2,055.87
2019 $334 $2,055.87
2020 $384 $2,055.87
2021 $461 $2,081.57
2022 $500 $2,107.59
2023 $553 $2,128.67
2024 $616 $2,149.96
In 2015, healthcare premiums made up 6% of my pension. In 2024, they will become 29% of my pension. Now, I realize I am lucky to have a pension, as many retirees do not. But 29%?!
The annual deductible for this healthcare “coverage” is $6,000 and the annual out-of-pocket maximum is $16,000 for just me. I do not have vision or dental insurance. My retirement plan pays a $230/monthly subsidy which is not part of the above numbers.
If you are thinking of taking early retirement, you might want to think again. Inflation has caused prices to rise but pensions are not rising enough to keep up. Social Security is not a viable option for me as my full retirement age is 66-1/2 and I am penalized for having an state pension. I have enough work credits, as I worked before becoming a full-time teacher, but Social Security rules prohibit me from getting my full retirement benefit when eligible.
The good news for me is that next year I will turn 65 and can apply for Medicare three months before my birthday month which is August. Halleluiah! There is a silver lining!