I started my career at ING. After five years, I was sure that I would end my career there. They became independent in the United States and in the 6th year I found a new home. After five years at a new company and becoming an owner, I knew I would end my career there. In the 8th year, I sold the shares back to form my own company. The point is, things don’t always go as planned.
According to Welfare Research Institutethe median expected retirement age is 65 years. I can confirm that almost everyone I see under 65 defaults to this age. Maybe that’s because that’s when Medicare starts. In reality, the actual median retirement age is 62 years old. So what about health care between ages 62 and 65? And is it worth working up to 65 years to get Medicare?
Closing the health insurance gap
Before Medicare, let’s start with the fact that you can get insurance without relying on an employer or organization. It may be a foreign concept, but marketplaces actually make it a lot easier. The bad news is: It’s expensive. Premiums vary widely depending on your age, region, and the type of plan you choose.
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According to Mercer Vanguard Medical Cost Modela moderate-risk 64-year-old with a “Silver” marketplace plan can expect to pay about $18,000 a year, including premiums and copays. For those retiring from the federal government, these numbers may come as a shock. If you are a business owner, $1,500 per month seems much more reasonable.
For clients who are more worried about losing their insurance than writing a big check each month. Consolidated Omnibus Budget Adjustment Act (COBRA) is a useful tool. COBRA essentially allows you to continue on your employer plan for up to 18 months after your employment ends. The problem is that you will be responsible for the entire premium, not just the employee’s portion.
For example, if your total premiums are $1,000 a month and your employer collects $600, you’ll pay the full $1,000 instead of the $400 you were paying previously. For customers who can afford it and are willing to pay, the 63 1/2 is the new 65.
Should retirement age be determined by medical care?
Returning to the question of whether Medicare is a good reason to wait until age 65. Let’s assume that the actual median retirement age is 62 years old. In this example, it is estimated that you will pay approximately $18,000 a year in medical expenses. Therefore, your total pre-Medicare out-of-pocket cost would be $54,000. The problems now are both economic and personal. On the financial side, it’s a math problem. Can you afford that extra cost? Your financial plan should tell you that. Our software includes health care as a line item and allows you to enter a “pre-Medicare” amount if you want to stop before age 65. If you want to try the free version, you can: Please visit here.
Personal question: What is $54,000 worth to you? Many people reading this will have no problem paying the money, but they still won’t want to do it. Just because you can afford a Mercedes doesn’t mean you’ll buy it.
My two cents: Medical care should not be the driving force in your retirement schedule unless it is financially necessary or your health status makes it too risky to change your plans. When you’re no longer satisfied with your job, when you can no longer rely on your salary, or when you’re tired of your boss’ jokes, it may be time to say goodbye.
