Hidden Costs of Retiring Early

By Joe Gullo

Published 06/12 2014 02:41PM

Updated 06/12 2014 02:44PM

Many of us dream of retiring early, but leaving the workforce sooner, could mean tens of thousands of dollars in extra medical costs.

Many people spend their entire lives, saving for their retirement, but even calling your job quits a couple years early, can mean a huge financial burden.

A new study by Fidelity shows that if a couple retires at 62 instead of 65, they'll face an additional $51,000 in medical expenses over those years. That doesn't even include the cost of over the counter medications, pain relievers, or long-term care, like nursing homes.

The main reason is Medicare doesn't kick in until the age of 65. So without coverage from a former employer, the couple is footing the bill for insurance themselves.

With the help of government subsidies, retirees with moderate incomes can lower their bill. However, many couples with joint retirement incomes wouldn't qualify for that.

So if you still want to retire early, how do you prepare for the potential burden?

Experts say to consider putting into your job's health savings account, which lets you invest any unused money, in order to build up a nest egg for healthcare expenses.

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