I started my career with ING. After five years, I was convinced I would finish my career there. They spun off in the U.S. and, after year six, I found a new home. After five years at my new firm, and after becoming an owner, I was convinced I would finish my career there. In year eight, I sold my shares back to start my own firm. The point is that things don’t always go as planned.

According to the Employee Benefit Research Institute, the median expected retirement age is 65. I can confirm that almost everyone I see who is younger than 65 defaults to this age, presumably because that is when Medicare starts. The reality is that the actual median retirement age is 62. So, what do you do about health care between 62 and 65? And, is pushing to 65 for Medicare worth the extra three years of work?

Bridging the health care cover gap

Let’s start with the fact that you can get insurance independent of an employer and a group, before Medicare. It may be a foreign concept, but marketplaces actually make it pretty easy. Here’s the bad news: It’s expensive. Premiums vary widely based on age, location and type of plan selected.

According to the Mercer-Vanguard health care cost model, a medium-risk 64-year-old with a “silver” marketplace plan can expect to pay about $18,000 per year, including both premiums and out-of-pocket expenses. If you’re retiring from the federal government, that number will shock you. If you are a business owner, $1,500 per month seems much more reasonable.

For our clients who are more worried about discontinuing their coverage than they are about writing a big check every month, the Consolidated Omnibus Budget Reconciliation Act (COBRA) can be a handy tool. COBRA essentially allows you to continue your employer plan for a period of up to 18 months after employment ends. The catch is that you are now responsible for the entire premium rather than just the employee portion.

For example, if the total premium for your policy was $1,000 per month and your employer picked up $600, you are now responsible for the entire $1,000, not the $400 you were paying previously. For clients who can afford it and are willing to pay for it, 63½ becomes the new 65.

Should health care determine your retirement age?

Back to the question of whether Medicare is a good reason to wait until 65. Let’s take the actual median retirement age of 62. In that example, we are estimating that you will pay about $18,000 per year for health care. So, your total out-of-pocket, pre-Medicare expense is $54,000. The question now is both financial and personal. On the financial front, it’s a math question. Can you afford that extra expense? Your financial plan should tell you that. Our software has health care as a line item and will allow you to put in a “pre-Medicare” amount if you call it quits before 65. If you want to try a free version, you can access it here.

The personal question: What is $54,000 worth to you? Plenty of you reading this will have no problem affording it, but still won’t want to do it. Just because you can afford a Mercedes doesn’t mean you’ll buy one.

My two cents: Health care shouldn’t be the driver of your retirement timeline except when financially necessary and when a health situation makes it too risky to change plans. When work stops fulfilling you, when you aren’t reliant on the paycheck and when you’re sick of your bosses’ jokes, it may be time to say goodbye.

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