If you’re eligible for full, normal retirement at a young age, there’s a lot to consider. Some examples include planning for health insurance, preparing to access personal savings or Social Security, or even beginning a second career after retiring. We’ll look closer at each of these elements to help provide a better understanding of the choices that come with retiring.
For our purposes, we’ll define “retiring young” as retiring before the age of 65, because this is when most have become eligible for Medicare – which can be a big factor when thinking about retirement.
Health Insurance
Many don’t realize how expensive health insurance can be when they aren’t yet eligible for Medicare, or when they don’t have an employer subsidizing their health insurance. To give an example of the possible disparity between Medicare-eligible and pre-Medicare medical insurance rates: for plans offered through the ASRS beginning in 2025, premiums range between $96.38 and $199.26 a month for a single-coverage Medicare plan (a plan that covers only you – no spouse or dependents) while rates for single coverage non-Medicare ASRS retirees are between $660 and $1,290 a month1 That’s a huge difference, and one that catches a lot of people off guard!
If you plan on retiring early, be mindful of how you plan to obtain health insurance. Will you have a working spouse whose plan you can join, or will you start a second career and get insurance through your future employer? Both are options that could save you money.
Personal Savings
Your ASRS pension is meant to be just one part of your overall retirement income, with personal savings and Social Security rounding out your retirement finances. However, even if you have a well-funded supplemental savings account, such as a 401(k), you might find you can’t withdraw funds without a financial penalty if you aren’t 59 ½ years old when you retire. A 10% penalty is common for these types of savings accounts, in addition to the typical taxes and fees involved. You may need to decide whether you’re willing to accept the penalty or wait to access these funds. Either way, make sure to research the rules specific to your type of savings account so you‘re better prepared when you retire.
Also, unlike your ASRS pension, which is guaranteed for life, personal savings are a finite resource – if you start withdrawing from it earlier than you initially planned, it could run out.
Social Security.
If Social Security is part of your retirement strategy, you’ll also need to research how early you are able (and willing) to take it. The age at which you can receive full benefits varies, falling between 66 and 67 depending on your age. The earliest you’re able to receive Social Security benefits is age 62, and you’ll be taking a reduced benefit – an estimated 29% lower benefit than what your full Social Security would be. Also, Social Security benefits vary from person to person depending on work history, age, and how much you’ve paid into Social Security. To get an idea of how much your Social Security benefit could be, visit SSA.gov, where you can use their online estimator to see a personalized estimate of your future benefit.
Starting a Second Career
This is often the solution for those who can retire at a young age with the ASRS, and may solve many of the potential hurdles we’ve already discussed. Receiving a paycheck from an employer and your ASRS pension2 could bridge the financial gap, allowing you to leave your personal retirement savings alone (or even keep adding to it) until there’s no penalty to withdraw, while also allowing you to wait to take Social Security benefits. If you work for an employer that offers health insurance, it could also help you avoid those high, unsubsidized non-Medicare health insurance rates.
Whether you’re thinking of retiring this year or in five years, at age 45 or 70, it’s never too early to start forming a plan! You could even find that the best option is to delay your retirement if you're close to hitting the next multiplier in your pension calculation3 For additional food for thought visit our thought visit our Retirement Central page at AzASRS.gov.
1 These are rates the ASRS has currently negotiated with UnitedHealthcare for Plan Year 2025. There are many places to source health insurance with varying levels of coverage and rates, but you’re likely to find a similar level of cost disparity between Medicare and non-Medicare medical plans. Once on Medicare, the government starts subsidizing your health insurance costs, allowing insurance companies to offer much lower monthly premiums than to those not eligible for Medicare. Back
2 Visit our Return To Work page for additional info on working after retirement.
3 Graded Multipliers are part of your pension calculation, with the multiplier increasing the more years of service you have. For more information, visit our Estimate Your Benefits page