For those who think that hitting the age of 65 means getting a monthly Social Security check to pay for living expenses and free healthcare through Medicare — think again. New surveys indicate that median retirement savings accounts are frighteningly low, and the cost of healthcare and prescription drugs during your retirement years could eat every penny ever saved.

If you want to retire before Medicare or are forced into early retirement due to company downsizing or budget cuts, there are specific considerations you need to put front-of-mind so you can live comfortably for the next 30 years or more without a paycheck. Here are some things to consider.

The median retirement savings total in America is about $144,000 according to a recent Transamerica survey. But consider that the average senior on Social Security today only collects roughly $18,000 a year in retirement benefits. Yet adults age 65 and older spend about $46,000 annually, according to the Bureau of Labor Statistics. That leaves a $28,000 annual shortfall.

In addition, to cover health insurance premiums and out-of-pocket prescription drug costs from age 65 on, you may need $130,000 if you’re a man, and $146,000 if you’re a woman, one study found. Not surprisingly, 28% of those with basic Medicare alone and no supplemental insurance report they cannot afford their healthcare bills or they are forgoing treatment.

The Transamerica survey also found the median amount of emergency savings is about $5,000 (that is savings outside of retirement savings). And 29% report having less than $5,000 in emergency savings. Yet the average age of retirement is 62-years old. The math doesn’t add up for having a successful retirement if you could live another three decades after retiring.

Take Retirement Savings Seriously

It’s never too early to start thinking about your retirement and how savings will shape the course of your senior years. But once you get close to your desired retirement date, there are steps you can take to grow your retirement total by saving money on items that you use every day or year.

Figure Out Where You Can Make Financial Changes to Save Money

One of the biggest financial stressors if you are planning early retirement before age 65 is losing your employer-sponsored health insurance plan. You might not know how to shop for insurance since your employer picked your health insurance plan structure for you. Or you might not even know what your options are.

When it comes to health insurance there are ways to get around paying full-price retail for COBRA coverage or buying a private insurance plan. COBRA insurance is typically offered by your employer when you retire (unless they agree to different compensation) and you pay 100% of the price for the insurance plus a 2% administration fee. The cost can be immediately prohibitive, especially if your employer was paying 50% of your health insurance premium or more.

ACA Health Insurance Plans

With your reduced household income you might qualify for a financial subsidy through the federal health insurance exchange or your state’s marketplace because you fall into the government’s poverty level guidelines now that you are retired. These guidelines (in most states) qualify you for a subsidy if your income is between 100% and 400% of the guidelines. For one person, it equates to total household income between $12,760 and $51,040 in 2020. In the 14  states that did not expand Medicaid, the percentage range is 138% to 400%.

If you do not qualify for a subsidy and need comprehensive major medical insurance due to a pre-existing condition or need the financial security for your own self-comfort, a private plan purchased from a health insurance company is another option, but you will pay the full retail price for the insurance. Last year, on average, individuals age 55-64 paid $790 each month for coverage. That’s nearly $10,000 a year for health insurance coverage alone.

Short-Term Health Insurance

One way to save on the monthly cost of health insurance is purchasing short-term health insurance. While short-term medical plans are considered temporary health insurance, in most states, you can purchase 364-days of short-term health insurance coverage for up to three consecutive years. If you don’t have a pre-existing condition and want coverage strictly for unexpected accidents or illness, these types of plans can “bridge the gap” to retirement and help you save hundreds if not thousands of dollars along the way. Beginning at age 60 short-term plans can cover you for three years or until you are eligible for Medicare. Each plan year new coverage periods go into e!ect, starting with new deductibles, coinsurance and out-of-pocket maximums. But even if you enroll for three years of coverage, the plan can be canceled at any time if you change your mind.

Highlights of short-term health insurance include:

  • Hospitalization and most professional health services.
  • Open network – see any doctor or hospital.
  • Flexibility. You typically have an array of deductible and coinsurance options.
  • Benefits targeted to your needs. Benefits like maternity coverage not included.
  • Coverage for as little as 30 days or up to three years depending on your immediate needs.
  • Plan can cover up to $1,000,000 per coverage period.

Why are the plans so economical? Short-term health insurance doesn’t cover any pre-existing conditions nor does it offer some services without a waiting period. It is meant to be coverage for the “right now” and not comprehensive, permanent medical coverage. But if you need a budget-friendly solution for a couple of years before Medicare begins, it is an option to consider.

Skip the Waiting Room and Use Telehealth

Another way to save on medical treatment is NOT run to the doctor every time you feel ill. Instead, try lower-cost telehealth, also known as telemedicine. Telehealth can cost half of what an in-person doctor’s office visit can be and if you have a larger deductible the savings can stack up if you make several doctor’s appointments a year. Many health insurance companies even offer free or discounted telemedicine with their insurance policies. Mental health is also offered by some companies as well so you can see a counselor privately from the comfort of your home without stressing out your bank account.

Don’t Take Social Security Until Age 70.

If you can live on a pension or some other retirement savings until you are 70,  you will get more money from the Social Security office if you delay your payments. If you start taking your Social Security at age 62 when eligible, you won’t get 100% of the benefits owed to you because you are choosing to take money from the federal government for a longer period of time. Only at age 66 do you receive 100% of your benefits. If you can wait until you are age 70 to start receiving benefits you will get 132% of benefits because you delayed the start of receiving monthly checks.

Use a Health Savings Account

Make sure you are contributing to a health savings account (HSA) up to the maximum contribution, which means starting at age 55, putting away an additional $1,000 each year as a “catch-up” contribution. You must have a qualifying health plan (usually a high-deductible health plan) in order to qualify for an HSA. When you reach age 65 you can take distributions from your HSA tax-free but if you enroll in Medicare you will no longer be allowed to contribute to your HSA. However, you can use the HSA money to pay for medical expenses and Medicare Parts A, B, D and Medicare HMO premiums tax-free with no penalties. Just remember to keep your receipts for tax purposes.

Downsize Your Home and Personal Objects

Has your house gotten too big now that the kids are gone? Do you have a car sitting in the driveway that isn’t used very much? These are big-ticket items that can put a fusion of cash into your savings if you no longer use the space or item. Look around at other big-ticket items in your home. If you rarely use it and it’s marketable, sell it and stash the cash.

Check Into Local Assistance

To find other categories where you might receive savings or be eligible for assistance, check with the National Council on Aging to see if you qualify for any assistance or financial relief in your local area.

Reminder on Medicare Eligibility Rules

If you apply for Medicare in a timely manner according to Medicare guidelines, your coverage starts the first day of the month you turn 65 years of age unless your birthday is on the 1st of the month. If your birthday is on the 1st of the month, you become eligible on the 1st of the prior month.

Planning your retirement and aging on Medicare can be a stressful time, but if you plan ahead and make the most of the savings potential that is available, you might be in a much more comfortable spot when retirement finally arrives.