For all the hazards that come to mind when trying to determine whether you can afford retirement, there’s one that opens an associated can of worms, the details of which are difficult to fully account – healthcare expense.

It’s what financial and Medicare expert Leah Miller calls the “healthcare gap,” the period between early retirement and Medicare eligibility at age 65.

Early retirees face high premium costs for individual health plans in the healthcare gap.  A married couple retiring prior to 65 will often spend $20,000 to $30,000 per year for their health premiums, until they become eligible for Medicare.

“The healthcare gap can be quite the black hole for retirement funds, and early retirees tend to not see it coming,” says Miller, CEO of Red Anchor Wealth Management (

“These are folks retiring before 65. People in this pre-Medicare bracket face rising healthcare premiums for individual plans. Even if a person has enjoyed perfect health, there’s no guarantee that one’s luck won’t run out, so going without health coverage is not an acceptable risk.”

Miller offers suggestions for preventing the loss of your retirement nest egg to unforeseen medical expenses during the healthcare gap.

• Keep employer coverage as long as possible. Even if your employer’s plan does not follow you into retirement, you may elect COBRA coverage for up to 18 months. It is often the best deal available.  
• Consider what happens to spousal benefits. With employer plans, a younger spouse may lose coverage if the primary insured transitions to Medicare. Get clarity on the options to continue coverage in the plan during retirement.
• Know your options when it is time for Medicare. To be sure, Medigap, also known as a Medicare Supplement, may be right for you – but only after you’ve enrolled in Medicare. At 65, retirees have rights and options that are only available to Medicare recipients. The cost difference from one plan to another can be literally tens of thousands of dollars over your retirement. The trick is picking the right type of plan for your health and financial situation, and to get the best price for that plan.  
• Don’t be one of many pre-retirees who are concerned but do not take action. Most people don’t adequately strategize their retirement plan to account for rising healthcare costs. There are multiple ways to plan for such costs, including heath savings accounts, which are tax-advantaged individual accounts geared toward paying for out of pocket healthcare expenses. Remaining balances in an HSA are able to be used for Medicare premiums and out of pocket costs in retirement.

Leah Miller is CEO of Red Anchor Wealth Management, (, a client-focused firm that tailors plans to individual and family needs. She holds Series 7 and 66 securities licenses, is a certified National Social Security Advisor and specializes in Medicare, Medicare Supplements, and Medicare Advantage.