The early retirement (FIRE) movement has many people saving hard and investing intently for freedom sooner. But a great many of those plans share one blind spot: every living cost is calculated except health costs, which become the largest and fastest-growing expense of the post-retirement years. This article closes that gap.
Why early retirement is a harder problem than ordinary retirement
Someone retiring at the usual age has a shorter "fragile" period. Someone retiring at 45 has to look after their own health for far longer. More importantly, the day the resignation letter goes in is the day three things vanish at once: the company's group insurance, the regular income that paid the premiums, and Section 33 social security status — while still being too young for any benefit intended for older people. That gap can run for a decade or more and has to be filled entirely with your own plan.
Rule one: lock in health insurance before you resign
Sequence matters more than anything here. Arrange personal health insurance while still employed, for three reasons. One, a regular income makes approval easier. Two, your health on the application date is usually better than it will be in five years' time. Three, the waiting periods run out while you still have group insurance as a back-up. Anyone who resigns first and then goes looking for insurance is negotiating from their weakest position.
Build a lifetime health budget into your FIRE number
A financial independence target with no health budget in it is a number that deceives you. What has to be added: the annual health premium, rising with age, through to the end of the projection (ask for the premium table by age and calculate it properly); the portions the plan does not cover, such as the room rate difference or outpatient costs; a separate emergency health reserve; and an allowance for medical inflation, which runs higher than general inflation [check the latest information]. The total may move your FIRE target, but moving on the truth beats dreaming on a number that is short.
A plan structure suited to life outside the system
- A main health plan renewable as long as possible — to age 80–99 according to the plan's conditions, because there will be no chance to "return to a group scheme."
- Choose a limit with the future in mind — a limit that fits today grows smaller and smaller against medical costs twenty years from now.
- Consider a deductible — when your portfolio has ample liquidity, taking a small portion yourself in exchange for a lighter premium all the way through is a deal that suits FIRE planners, who already have financial discipline.
- Don't forget the basic entitlements — after leaving Section 33, consider applying for Section 39 within the time limit to maintain social security entitlement, or use universal coverage as the base, according to your status [check the latest information].
Where the premiums come from once there is no salary
Be clear about which pocket pays the health premiums after retirement. A popular approach is to ring-fence part of the portfolio as a "health bucket" invested at low risk, paying premiums from its return or by drawing down gradually, or to use cash flow from an annuity built up earlier. Having a separate bucket means a bad year in the market never forces a choice between the portfolio and the policy.
In short
A sustainable early retirement is an equation with health in it from the beginning: lock in the plan before resigning, build the lifetime health budget into the target, choose a structure that renews for a long time, and set up a clear bucket to pay the premiums. Then the dream of freedom is not derailed by a hospital bill. If you are planning this route and would like the health numbers in your plan checked, message us on LINE any time.
This article was inspired by material from the Thai Financial Planners Association (TFPA) and has been entirely rewritten.