Why a 62-Year-Old With $280,000 Saved Will Push Carts at Costco Instead of Writing a $1,100-a-Month Check for Health Insurance
Before Medicare kicks in at 65, three years of unsubsidized health insurance can quietly drain a retirement account faster than almost any other expense. One unexpected job choice changes the math entirely.
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Imagine a 62-year-old single woman with $280,000 in a traditional IRA who plans to claim Social Security at 67. She needs about $42,000 a year from the IRA to cover her bills. Her biggest problem is the three years before Medicare, as an unsubsidized silver plan on the Affordable Care Act (ACA) marketplace costs about $1,100 a month where she lives. Her answer is a part-time job at Costco (NASDAQ:COST | COST Price Prediction) so she can get on its health plan. On paper, it can look like a step backward, but it is the best financial move available to most people in her position.
The reality is that plenty of people in similar situations are making the same choice. A recent Yahoo Finance story about a 62-year-old who took a school bus driving job noted that a 62-year-old buying a silver ACA plan without a large subsidy “can easily face premiums of $700 to $1,200 a month.”
Why Premiums Before 65 Eat Into Retirement Savings
Under ACA rules, insurers can charge a 62-year-old up to three times what a 21-year-old pays for the same plan. The enhanced premium tax credits that held costs down expired at the end of 2025. With $42,000 in IRA withdrawals, she still gets a partial credit because she stays below the roughly $62,600 cutoff for a single person. That credit is smaller than it used to be.
However, there is a core problem as every IRA dollar she takes counts as gross income under 26 U.S.C. § 408(d)(1), and the premium credit is based on household income under 26 U.S.C. § 36B(b). She is paying premiums from the one account that must last her another 30 years.
How Costco Cuts a $42,000 IRA Withdrawal to About $10,000
Costco’s lowest-paid employees earn $20 per hour under its current pay agreement. This means that at 24 hours a week for 52 weeks, she earns $24,960 a year, while the health plan covers up to $13,200 of yearly marketplace premiums.
On paper, that would cut her IRA withdrawal to $3,840. In practice, she still pays payroll taxes at the 7.65% employee rate, her share of Costco’s premium, and income tax. A realistic withdrawal is about $10,000 a year. Over three years, the difference adds up: if she keeps taking $42,000 a year, about $154,000 remains at 65, before investment growth. If she takes $10,000 a year, about $250,000 is left. That is roughly $100,000 more in her IRA as Medicare starts, and that money keeps compounding.
Because she hasn’t claimed Social Security, the earnings test doesn’t apply. If she claimed at 62 while working, the 2026 earnings limit for people under full retirement age is $24,480, rising to $25,560 in 2027. Her wages would hit that limit, causing another set of issues.
Costs of the Costco Route
Three drawbacks matter here:
- Waiting period. Costco has required part-time workers to log 450 eligible paid hours before benefits begin, with coverage starting the first day of the second month after that. At 24 hours a week, it takes about 19 weeks to reach 450 hours. Plan to cover roughly six months with COBRA or an ACA plan. Costco does not publish an hours threshold or waiting period, so confirm the current rules at the warehouse during hiring.
- Physical work. Pushing carts, stocking pallets, and working the registers means you’ll be on your feet for hours. If you have joint or back problems, this plan may not hold up for three years.
- Weekend schedules. Warehouse schedules include weekends. That is a real lifestyle cost for someone who expected to be retired.
Staying Retired Costs About $100,000
The other path is to stay retired, which costs $42,000 a year and covers marketplace coverage. That only makes sense if her health rules out physical work. Some people try to close the gap by claiming Social Security at 62. That permanently locks in a smaller check, and any job would run into the earnings test. For most people, the Costco path wins.
The job has a second benefit. Once she is on Costco’s plan, her income no longer affects her health premium. Wages plus a $10,000 withdrawal, minus the $16,100 standard deduction, leave her taxable income well inside the 12% bracket. For a single filer in 2026, that bracket runs to $50,400. That makes these years a good time to convert some IRA money to a Roth at a low tax rate (the low-tax stretch between your last paycheck and your first required withdrawal is the whole subject of our free Roth window guide). Roth money comes out tax-free later, which reduces the IRA balance that will face required withdrawals starting at 73.
Your First Moves Before Applying
The timeline comes first. Find out when your coverage would actually begin, then make sure COBRA or a marketplace plan covers every month until then. While you are on marketplace coverage, keep IRA withdrawals small, so you keep as much of the premium credit as you can.
A big consideration is not claiming Social Security at 62 just because you are working anyway. Earning wages above the limit can cause benefits to be withheld, and claiming early cuts your benefit for life.
One meeting with a fee-only planner can pay for itself here. The plan depends on getting three things right: when you take IRA withdrawals during the months before Costco coverage starts, how much you convert to a Roth once you are on the Costco plan, and when you claim Social Security. A single badly timed withdrawal can reduce your premium credit, so the timing matters as much as the job.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
