Can You Retire at 60 With $900,000? Don’t Forget Health Insurance Costs

You are 60, single, and have $900,000 saved. You want to stop working in 2026. The 401(k) math looks fine. Then you price health insurance and remember that Medicare does not show up until age 65. That leaves a five-year coverage gap.

This scenario appears constantly on r/FIRE forums. People have enough money to retire, but are blindsided by unsubsidized ACA coverage costs in their 60s. A bad plan here can quietly drain six figures from a portfolio that needed to last 30 years.

A Silver plan for a 60-year-old runs roughly $850 to $1,200 per month gross premium depending on ZIP code. At a $1,000 monthly average, that is $12,000 a year, or $60,000 across five years. Add Kaiser Family Foundation’s marketplace estimate of $4,800 per year in deductibles and out-of-pocket spending, and you reach $24,000 more. The potential combined cost: $84,000.

Healthcare inflation could push that figure even higher. Core PCE sat near 129 in March 2026, in the top decile of its 12-month range. Premiums historically track at or above general inflation, so the $84,000 figure is closer to a floor than a ceiling.

The single most important number in this scenario is your modified adjusted gross income (MAGI) each year of the bridge. ACA premium tax credits phase out based on MAGI. Keep MAGI under roughly 400% of the federal poverty level (about $60,240 for a single filer in 2026) and subsidies can collapse most of that $60,000 premium bill. Pull a $90,000 traditional IRA distribution to fund living expenses, and you may write the full premium yourself.

Every withdrawal has a tax cost and a subsidy cost. A dollar from a traditional IRA shows up as ordinary income twice: once for the IRS, once for healthcare.gov.

Three Paths To Consider

The default path (draw from the IRA, pay full freight, hope for the best) is the worst option for most people in this position.

1. Subsidy planning with a layered withdrawal stack. Fund living expenses primarily from taxable account basis (return of principal, not taxed), Roth contributions (already taxed, do not count toward MAGI), and HSA reimbursements for qualified medical costs. Add only enough traditional IRA income to stay under the subsidy cliff. For most single retirees with $900,000, this converts an $84,000 healthcare bill into something closer to $25,000 to $35,000 across five years.
2. The pre-60 Roth conversion runway. If you are reading this before retirement, fill the 22% federal bracket with Roth conversions in your late 50s. You pay tax at known rates now, then enjoy MAGI-free Roth withdrawals during the ACA years. The 10-year Treasury at nearly 5% and the 5-year at around 4% let you park the bridge cash in a Treasury ladder while conversions happen.
3. HSA stockpiling for the post-65 chapter. Every dollar left in an HSA can pay Medicare Part B, Part D, and Advantage premiums tax-free after 65. Treat the HSA as a healthcare-specific Roth, and pay current medical bills from cash flow when possible.

Your state of residence also matters. California, New York, and Massachusetts layer state subsidies on top of federal credits. Other states leave you fully exposed to base premiums exceeding $1,200 a month for a 60-year-old. Verify your specific county on healthcare.gov before locking in a plan.

What to Do First

Build a five-year MAGI map this month. Project each year’s income from every account, including traditional IRA dollars you intended to spend, and calculate where you fall relative to $60,240. That spreadsheet is worth tens of thousands of dollars over the bridge.

Then size your taxable and Roth balances against your annual spending need. If they cover four to five years of living costs, the subsidy path is open. If they do not, the Roth conversion ladder needs to start before you retire.

The mistake to avoid: assuming you will qualify for ACA subsidies because you stopped working. The IRS cares only about MAGI, regardless of whether you have retired. If your assets are spread across IRA, Roth, HSA, and taxable in a way that makes the MAGI math non-obvious, you might benefit from hiring a fee-only advisor who specializes in ACA-aware withdrawal sequencing.