Financial advisors can dream all they want about serving high-net-worth clients who have $10 million in retirement savings and can support 50 or more years of retirement at age 45.

The reality, advisors say, is that many ordinary, moderately affluent baby boomer clients will have to try to keep full-time, permanent jobs for many years after the normal retirement age simply to pay for health coverage.

“I try to avoid using the word ‘retirement’ until people are in their 80s,” says Michael Dubis, president of Touchstone Financial L.L.C., Madison, Wis.

Dubis already deals with many working clients past age 65 and boomers who intend to work past the normal retirement age, simply because he enjoys talking to clients who are “wired to contribute.”

But Dubis says concerns about the cost of post-retirement health care already are playing a role in older boomer clients’ decisions about efforts to “phase into” retirement, work part-time or postpone major cutbacks in working hours until they suffer from serious health problems.

Aetna Inc., Hartford, recently reported that the typical retiree is spending an average of about $640 a month on health coverage premiums and health care expenses.

Officials at the U.S. Government Accountability Office touched on health coverage issues in a review of strategies that the U.S. Department of Labor ought to take to help older workers build bridges with employers.

“Working later in life could help minimize job vacancies and skill losses, increase personal retirement savings, and ease fiscal pressures on Social Security and Medicare through increased tax revenues,” Barbara Bovbjerg, a GAO director, writes in a letter presenting the GAO’s findings. “Yet most American workers take Social Security retirement benefits at age 62, and little has been done to encourage those who can and want to work later in life to do so.”

The health coverage needs of workers in the 55-64 age category and the over-65 category could be areas in need of attention from regulators and Congress, Bovbjerg suggests.

Boomers are more likely to have health coverage than other adults, and when the GAO organized 16 focus groups across the United States consisting of workers and retirees ages 55 to 70, “relatively few participants in each focus group indicated that they were compelled to work to acquire health insurance,” Bovbjerg writes.

But some focus group members wondered whether the cost of covering their health benefits makes them less attractive to employers. One focus group member said, “I’m thinking they let me go because of my age, and they don’t have to pay extra insurance.”

One barrier for boomers who hope to work past age 65 is a federal law requiring that employer-sponsored health coverage be the primary insurer for workers over age 65 and that Medicare be a secondary insurer for those workers.

Some people think the law “creates barriers or at least complicates the continuation of work past age 65,” Bovbjerg writes.

Out in the field, Dubis objects to the idea of encouraging boomer clients to count on Medicare and related programs to cover their post-retirement acute health care costs.

Financial experts repeatedly observed during the recent debate over Social Security reform that the Medicare trust fund is in much worse shape than the Social Security trust fund. “The math is that Medicare is not going to survive unless something gets fixed,” Dubis says.

Many projections seem to suggest that Medicare could collapse around the time some boomers turn 90, which would be a bad time for boomer retirees to lose health coverage, Dubis observes.

Health coverage costs can be an even bigger challenge for boomers who want to retire before they are eligible for Medicare, because family coverage can easily cost $15,000 per year, Dubis says.

Bovbjerg and her colleagues at the GAO have few concrete suggestions for ways to help keep boomers in the work force past the normal retirement age. Instead, they suggest that the Labor Department join with other government agencies to set up well-publicized, high-level conferences before the oldest boomers reach age 65.

Affluent and moderately affluent advisory practice clients will, naturally, tend to have competitive advantages over other older workers.

Lawyers, engineers and other high-level professionals in competitive fields probably bring enough value to their employers that they will have an easy time keeping jobs with good health benefits, Dubis says.

But Dubis finds that some boomer managers have a tough time transferring their skills to other employers that provide health benefits.

Dubis warns against the strategy of setting up an ordinary small business to get health coverage. Older clients without entrepreneurial experience could fail in ways that will hurt the rest of their retirement, Dubis says.

But many older clients who will have trouble keeping their current jobs do have skills they can use to set up consulting firms that might generate income to help cover health care expenses and other expenses later in life, Dubis says.

What Scares Them

Boomers’ Major Retirement Concerns

Risk

% for whom risk is a major concern

Not being able to afford health care

63%

Not being able to care for yourself

58%

Social Security being reduced or eliminated

55%

Not having enough money

45%

Having to move from your home

35%

Feeling lonely

11%

Source: Allstate Corp., Northbrook, Ill., 2005 “Retirement Reality Check” survey