Laid Off at 60: Can I Just Retire Now?
You're 5 years from Medicare and 2 from Social Security. Retirement is close enough to touch - but is it close enough to afford?
Key Takeaways
- 1At 60, you're 5 years from Medicare and 2 from Social Security - the gap is bridgeable.
- 2Healthcare costs are the biggest hurdle - budget $1,500-2,000/month for a couple until Medicare.
- 3You can access your 401k penalty-free if you left this employer at 55+ (Rule of 55).
- 4Part-time work can bridge the gap while preserving your nest egg.
- 5Run the numbers carefully - you might be closer to retirement than you think.
Understanding the 60-65 Gap
At 60, you're frustratingly close to traditional retirement but facing a challenging gap: **2 years until Social Security** (at 62, reduced) or 7 years for full benefits (67) **5 years until Medicare** (65) The question isn't whether you *want* to retire - it's whether you can afford to bridge this gap without depleting the savings you'll need for the next 25-30 years.
- The 5-year healthcare gap is your biggest expense
- Early Social Security is possible at 62 but reduces benefits by ~30%
- Your 401k/IRA must fund 5 years AND 25+ years of retirement
- Part-time work dramatically improves the math
The Math: Can You Retire at 60?
Let's do a reality check. For a single person, estimate your needs:
- **5 years of pre-Medicare retirement = ~$246,000** just for expenses
- **Add a cushion for unexpected costs** - medical, repairs, etc.
- **Social Security at 62** might cover $1,500-2,000/month of the $3,400+
- **The gap** - What savings do you need to cover the rest for 25 years?
| Expense Category | Monthly (60-65) | Monthly (65+) |
|---|---|---|
| Housing | $1,500 | $1,500 |
| Healthcare (ACA/COBRA) | $1,200 | $500 (Medicare) |
| Food & Essentials | $600 | $600 |
| Transportation | $400 | $400 |
| Other | $400 | $400 |
| **Total** | **$4,100** | **$3,400** |
Example monthly expenses before and after Medicare
Quick Rule of Thumb
You need roughly 25x your annual expenses gap (expenses minus Social Security) in savings. If SS covers $20,000/year and you need $45,000/year, you need 25 x $25,000 = $625,000 minimum.
Bridging Healthcare: Your Biggest Challenge
Healthcare from 60-65 is the make-or-break factor:
- **ACA subsidy trick:** Keep taxable income low through Roth conversions and capital gains management
- **Part-time jobs with benefits:** UPS, Costco, Starbucks offer insurance for 20+ hours/week
- **COBRA:** Good bridge if starting soon; plan for what happens after 18 months
| Option | Estimated Cost | Pros | Cons |
|---|---|---|---|
| ACA Marketplace | $800-1,800/mo | Subsidies if low income | Income limits for subsidies |
| COBRA | $1,500-2,500/mo | Keep current coverage | Expensive, only 18 months |
| Spouse's plan | Varies | Often cheapest | Only if spouse employed |
| Part-time job w/benefits | Free-$500/mo | Coverage + income | Requires working |
| Healthcare sharing | $300-600/mo | Lower cost | Not real insurance, limits |
Healthcare options for the 60-65 gap
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Bridge Strategies That Work
Here are proven strategies to bridge from 60 to full retirement:
- 1**Rule of 55 withdrawals** - Take penalty-free 401k withdrawals to cover the 60-62 gap
- 2**Part-time work + reduced withdrawals** - Even $2,000/month income cuts withdrawal needs dramatically
- 3**Social Security at 62** - Not ideal, but might make sense to preserve savings
- 4**Geographic arbitrage** - Relocate somewhere cheaper during the bridge years
- 5**Roth conversion ladder** - Convert traditional to Roth now while in lower tax bracket
- 6**Home equity** - HELOC or downsize to access home equity (carefully)
The Part-Time Bridge: Best of Both Worlds
Part-time work from 60-65 is often the optimal strategy:
- **$2,000/month income** - Covers most non-healthcare expenses
- **Get benefits** - Some part-time jobs include health insurance
- **Preserve savings** - Let your 401k/IRA continue growing
- **Delay Social Security** - Every year past 62 = ~7-8% more lifetime
- **Stay engaged** - Work is associated with better cognitive health
- **Lower stress** - Part-time is very different from full-time pressure
Part-Time Bridge Example
Working 25 hours/week at $20/hour = $2,167/month. Add employer health insurance (saving $1,500/month). Total value: ~$3,700/month, or $44,000/year. That's $220,000 preserved over 5 years.
Don't Underestimate Healthcare Costs
The #1 reason early retirement fails is healthcare costs. A serious illness without insurance can cost $100,000+ and destroy your entire retirement plan. Do not retire at 60 without a solid healthcare strategy.
Protect Your Bridge Fund
The savings you're relying on for the next 5 years need to be protected from market crashes. A 40% market drop at 60 could delay your retirement indefinitely.
- Consider moving 3-5 years of expenses into stable assets
- A Gold IRA provides crash protection for your bridge fund
- Physical gold maintains purchasing power during market chaos
- You can't afford sequence risk this close to retirement
- Roll over old 401ks into protected Gold IRA - tax-free
Frequently Asked Questions
1What if I have $500,000 saved - is that enough to retire at 60?
It depends heavily on your expenses and Social Security. With $500k, following the 4% rule gives you $20,000/year. Add Social Security at 62 (~$18,000-24,000/year). If your expenses are $45,000/year, it could work - but healthcare costs make it tight. Part-time work for 5 years would make it much more comfortable.
2Should I take Social Security at 62 to avoid depleting savings?
Maybe. If taking SS at 62 means keeping $100,000+ more in savings that can grow, it might make sense despite the ~30% reduction in benefits. Run the numbers both ways. The crossover point is typically around age 80-82.
3Can I get ACA subsidies if I have a large 401k?
Yes! ACA subsidies are based on income, not wealth. Your 401k balance doesn't count against you - only the money you withdraw counts as income. This is why Roth conversions and withdrawal strategies matter so much for early retirees.
4What about retiring abroad for cheaper healthcare?
International retirement can dramatically reduce costs - Mexico, Portugal, Costa Rica, and others have quality healthcare at a fraction of U.S. costs. However, you'd give up Medicare when you return (can re-enroll but with potential penalties), and Social Security rules apply. It's a viable strategy but requires careful planning.
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