--- title: The Retirement Decision That Could Cost You $51,000 description: An early retirement may be good for reducing stress but it will also shrink your nest egg. authors: - name: donnarosato url: https://money.com/author/donnarosato/ at_money_since: 2014 articles: 6 covers: - Retirement - Career Advice former_staff: true published: '2014-06-12T13:40:02.000Z' modified: '2014-06-12T13:40:02.000Z' section: Retirement tags: - Affordable Care Act - Carolyn McClanahan - early retirement - Fidelity - Health Care - healthcare costs - long term care - Retirement - retirement planning word_count: 466 canonical: https://money.com/the-retirement-decision-that-could-cost-you-51000/ type: Article source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![The Retirement Decision That Could Cost You $51,000](https://money.com/content.money.com/wp-content/uploads/2014/06/140601_money_gen_13.jpg?crop=0px%2C733px%2C4780px%2C2689px&resize=1012%2C569&quality=85&strip&ssl=1) If you’re worried that health care costs will take a big bite out of your retirement income, don’t retire early. Couples retiring at age 65 will spend an average $220,000 on health care expenditures, according to the 2014 [Retiree Health Care Cost Estimate](https://www.fidelity.com/viewpoints/retirement/retirees-medical-expenses "Fidelity Retiree Health Care Cost Estimate") by Fidelity Investments. But if you leave the job before 65, you'll face even higher costs. A couple retiring at 62 would pay $17,000 a year in insurance premiums and out-of-pocket expenses—a total of $51,000—before reaching Medicare eligibility at 65, Fidelity calculated. That would push your total retirement health care costs to $271,000. “If you have to buy health insurance when you’re older and you’re not on Medicare yet, it’s going to be a lot more expensive,” says Carolyn McClanahan, a doctor and a certified financial planner in Jacksonville, Florida. Even under the Affordable Care Act, older people spend $500 to $1,000 more a month than younger people do in premiums, she points out. All the more reason to delay your retirement as long as you can. If you wait till age 67, you could save $10,000 a year on your medical expenses. That's assuming you stay employed and your company pays the majority of your health care costs, which allows you to delay taking Medicare. “On average, Medicare picks up much less than the typical employer plan,” says Sunit Patel, senior vice president of Fidelity Benefits Consulting. There is some good news in Fidelity’s latest analysis. Health care expenses have moderated in recent years, so this year's $220,000 lifetime expense is unchanged from 2013. That slowdown is the result of reduced costs for long-term prescription drugs covered by Medicare Part D, as well as lower per-enrollee Medicare expenditures. Still, whether you retire at 62 or 67, health care is a big-ticket item—and you need to plan for more than just the medical bills. Fidelity's estimates don't include the cost of paying for long-term care services, such as a home health aide or a nursing home, in the event [you become disabled](http://longtermcare.gov/the-basics/who-needs-care/ "Aging.gov who needs long-term care"). Of course, the timing of your retirement isn’t always something you can control. About half of retirees report that they left the workforce earlier than planned because of health issues, a layoff, or to care for an elderly relative, according the [Employee Benefit Research Institute](http://www.ebri.org/files/Final-FS.RCS-13.FS_2.Expects.FINAL.pdf "EBRI Changing Expectations of Retirement"). If you want to retire early, or think you’ll be forced to leave the workforce, be sure to [estimate your health care costs](https://apps.hvsfinancial.com/hvadvisor/ "HealthView Health Estimator") and budget that into your retirement spending. If you’re in ill health or have a chronic condition such as diabetes, you may need to set aside more money for doctor visits and prescription drugs. And take whatever steps you can to improve and [maintain your health](https://money.com/topic/adviser-client/ "Money: McClahanan on obesity and insurance"). “If you’re in your 50s, this is the time to take good care of yourself,” says McClanahan. ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/the-retirement-decision-that-could-cost-you-51000/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Retirement", "item": "https://money.com/retirement/" }, { "@type": "ListItem", "position": 3, "name": "Retirement Planning", "item": "https://money.com/retirement-planning/" }, { "@type": "ListItem", "position": 4, "name": "The Retirement Decision That Could Cost You $51,000" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/the-retirement-decision-that-could-cost-you-51000/#webpage", "url": "https://money.com/the-retirement-decision-that-could-cost-you-51000/", "name": "The Retirement Decision That Could Cost You $51,000", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2014-06-12T13:40:02.000Z", "mainEntity": { "@id": "https://money.com/the-retirement-decision-that-could-cost-you-51000/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/the-retirement-decision-that-could-cost-you-51000/#breadcrumb" }, "dateModified": "2014-06-12T13:40:02.000Z" }, { "@type": "Article", "headline": "The Retirement Decision That Could Cost You $51,000", "articleSection": "Retirement", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2014/06/140601_money_gen_13.jpg?quality=85", "width": 4780, "height": 3540 } ], "author": [ { "@type": "Person", "name": "donnarosato", "url": "https://money.com/author/donnarosato/", "@id": "https://money.com/author/donnarosato/#author" } ], "publisher": "https://money.com/#organization", "datePublished": "2014-06-12T13:40:02.000Z", "description": "An early retirement may be good for reducing stress but it will also shrink your nest egg.", "abstract": "An early retirement may be good for reducing stress but it will also shrink your nest egg.", "@id": "https://money.com/the-retirement-decision-that-could-cost-you-51000/", "inLanguage": "en-US", "dateModified": "2014-06-12T13:40:02.000Z", "wordCount": 466, "keywords": [ "Affordable Care Act", "Carolyn McClanahan", "early retirement", "Fidelity", "Health Care", "healthcare costs", "long term care", "Retirement", "retirement planning" ], "about": [ { "@type": "Thing", "name": "Retirement", "sameAs": [ "https://en.wikipedia.org/wiki/Retirement" ] }, { "@type": "Thing", "name": "Retirement planning", "sameAs": [ "https://en.wikipedia.org/wiki/Retirement_planning" ] } ] } ] } ```