How does the F.I.R.E. movement affect insurance?

FIRE movement written on a napkin next to a cup of coffee

Retirement is not an age it’s a financial number and retiring at the age of 65 is a myth. Increasingly more people are retiring earlier (or much later) than the typical age. The desire to retire early is starting to spread throughout the United States, creating the F.I.R.E. movement.

What is the FIRE movement?

F.I.R.E. stands for “Financial Independence, Retire Early.” According to DaveRamsey.com, the goal is to save and invest very aggressively. By investing between 50 – 75 percent of one’s income, the goal is to retire sometime in one’s 30s or 40s.

The key to F.I.R.E. is keeping expenses down, whether it’s downsizing your house, purchasing a used car, and sticking to a tight budget. One of the main concerns for people who want to retire early is health insurance.

Keep in mind that participating in the F.I.R.E. movement is not for everyone. It may require you to set aggressive goals to achieve financial independence at such a young age. It may also require simple living in order to save so much money.

Health insurance with the FIRE movement

Health insurance is one of the benefits commonly offered by employers in the United States. Getting health insurance through your employer can help cover much of the cost of a health insurance policy, since your employer typically covers some of it. One of the greatest challenges for people looking to retire early with the F.I.R.E. movement is health insurance coverage.

If you are considering retiring before the age of 65, you can expect to face extremely expensive health insurance premiums. If you’re not working, you won’t be able to have a health insurance plan through an employer and if you are younger than the age 65, you are not eligible for medicare.

Health insurance has become increasingly expensive in the United States and many can’t afford it without the help of their employer. There are many ways you can find to afford health insurance.

How to afford health insurance after retirement

One of the main reasons why people are able to retire early is because they have enough money saved up to live the rest of their lives. The key to the F.I.R.E. movement is to save every penny before you retire and spend and indulge after you retire.

To save up enough money so that you can retire early and still afford health insurance, look for ways to boost your income and make some extra cash so you can reach financial independence. Consider a side hustle. Having another income in addition to your primary full-time job before you retire can help you save up faster.

Once you retire early from your full-time job, you can consider working part-time on something that you enjoy if you still need some extra money to afford health insurance and other expenses. You can consider keeping your side hustle.

Another option is to invest. Even investing 15 percent of your income will add up in years to come. From investing, time and interest will work in your favor.

When planning for your early retirement, be sure to include health insurance in your budget. It will likely be one of your most important expenses, but also one of the most important.

How to obtain health insurance after early retirement

One of the easiest ways to obtain health insurance after you retire early is through your spouse’s employer’s health plan. If your spouse is still working and is eligible for insurance, more than likely there is a family plan you can join.

You can also check with your previous employer to see if you are eligible for retiree health care insurance. It is important to note that there are some restrictions on this option, such as age and amount of years worked at the previous company.

Some people can also seek part-time jobs that provide health care insurance options. Although you are part-time, you may still have to cover all or most of the cost of your health insurance. There is also an option called group plan. With a group plan, an employee can benefit from an insurance plan established or maintained by an employer or by an employee organization.

If none of these options are available to you, there are a few other options you can consider that are outlined below.

COBRA

Another option is the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA. This law is that if your previous employer offered healthcare and employed over 20 people, you have the right to your previous healthcare plan for up to 18 months unemployed.

The basic idea of COBRA is to help you in the gap while you’re unemployed and looking for new health insurance.

Private company health insurance options

If you are generally healthy, you should review your options through a private insurance company by shopping around and comparing prices for health insurance. Whether you are looking for a family plan or individual coverage private health insurance, companies offer many diverse options.

The most common types of health insurance policies that you’ll find are HMOs, PPOs, EPOs, or POS plans. Whichever policy you choose will determine your out-of-pocket costs and which doctors you can see. Also, if you have preferred doctors who you want to keep seeing, ensure that your plan enables you to continue to see them. If you have medicine that you are currently taking, you’ll want to ensure that your new plan covers it.

Healthcare sharing programs

Healthcare sharing programs are religious-based programs that allow members to share healthcare expenses. Each member pays a monthly premium and it’s distributed to a shared pool and taken out sporadically when one has to pay medical expenses.

Sharing programs are built upon the principle that people with similar values and beliefs can come together and share each other’s burdens, such as the cost of healthcare insurance. The monthly cost of these programs is much more affordable than the typical healthcare insurance premium.

To clarify, health sharing programs are not health care or health insurance. However, it’s an option to help pay for unexpected expenses if you don’t have health insurance.

Government-provided health insurance

Many people who participate in the FIRE movement are able to buy health insurance through the Affordable Care Act health insurance marketplaces, which allows qualified people to have insurance on their own. ACA health insurance options including medical, dental, vision, and other types of health insurance.

You may be able to qualify for a subsidy. This is only available to those who qualify. To qualify, your income must be below the federal poverty level. While many FIRE movement people are able to get health insurance this way with a subsidy, it’s not a permanent solution. The Affordable Care Act subsidies are subject to change.

The cost of ACA depends on many factors like your age, location, household size, and income, the type of health insurance plan you choose and whether you use tobacco products. It will also vary based on the type of plan you’re looking for and your family size. You can start comparing policy and coverage options in your state at HealthCare.gov.

Ways to save on healthcare costs in the future

The high cost of healthcare insurance is generally unavoidable. To save money, evaluate purchasing a better healthcare plan and not the basic cheapest one. At first glance, the cheapest one may seem like the best option. However, cheap health insurance can cost you money in other ways. Investing in a better plan will save you from paying upfront out of pocket costs at the doctor’s office.

Three additional ways to save money are by requesting generic drugs, buying medications in bulk, and requesting free medical samples. This can save you money without harming yourself or your insurance policy at all.

Why F.I.R.E. is not for everyone

To retire early, you have to have a large sum of money saved up that will last you the rest of your life. No matter how much money you save by cutting down your purchases, the vast majority of people retiring before 40 have had six-figure salaries.

Wanting to retire early and cutting down the spending of things you like could lead to a very frugal lifestyle that some cannot manage and may not be worth the reward in the end. Getting a handle on the unexpected expenses around health insurance will provide a good start. However, true decisions need to be made by understanding all of the ramifications of such a decision. Whether retiring early or not, saving more of one’s income can prove beneficial regardless of when it is required (in the near or distant future).

If you’re considering participating in the F.I.R.E movement, be sure to find ways to save money on every day expenses, including car insurance! Get car insurance quotes from multiple companies to compare and find the best price. Use Clearsurance’s car insurance calculator to help you get started.


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