Major Risks - Medical Coverage and Sequence of Returns

I have been focusing on the positive so far.  There are a couple of major risks with retiring (slightly) early at 59.  Vicky and I were discussing these last weekend.

They are medical coverage and sequence of return risks.

Medical Coverage Risk

Because I have moved around from company to company, I have no company promising me medical insurance coverage from 55 through "life" (whatever that means these days).  Earlier this year, when I was working with NewRetirement.com to plan my retirement, I went looking in the HR pages for my company and there I discovered that having started there after 2014 (I started in 2015), I qualify for nothing after retiring.  That was both scary and freeing... I was on my own, but also I had no reason to continue working until some magic age (e.g., 65 or 15 years of service) because it wouldn't make any difference to me.

The main reason for my original plan of waiting until the end of the year to retire was to get past the 2024 election.  I'm going to have to rely on COBRA and Obamacare.  While Obamacare is more and more an accepted government benefit, I have heard the one candidate mention a couple of times in the past few months that he still intends to undo this program.  If that comes to pass, I may have to deal with 3.5 years of getting health insurance as a person with pre-existing conditions.  We'll cross that bridge if we have to.

Sequence of Returns Risk

This is a risk that EVERYONE has to face these days as they enter into retirement UNLESS, the have a fully funded pension that doesn't require savings, OR they are retiring on SSI only.

Without going into a lot of financial details, the basic thinking is that for someone relying on investments to retire, the magic of compounded interest will serve you greatly as retirement progresses.  BUT if you have a series of bad years early in your retirement life, that is hard to recover from, and indeed, looking at the worst of the Monte Carlo simulations confirms that.

There's not much one can do here.  At some point, you just have to jump into the river and see where it takes you.  The best way to handle some early bad years is to have as much flexibility in your plan (especially the spending).