Navigating IRMAA

Summer school is still in session. 

When it comes to reducing income related surcharges throughout your retirement years, pay attention to IRMAA.

The Income-Related Monthly Adjustment Amount (IRMAA) surcharge can affect high-income retirees enrolled in Medicare. 

The Social Security Administration (SSA) calculates your IRMAA based on income levels provided by the Internal Revenue Service.

The current year’s amount is calculated using your tax information from two years ago. 

Here is where things get interesting.

IRMAA surcharges are based on IRMAA income brackets. This means that an increase of $1 in income could push you into the next IRMAA bracket.

The additional $1 in income could end up costing you money!

IRMAA planning should be part of your comprehensive long-term financial strategy. 

The best way to keep IRMAA from creeping into the next bracket is by decreasing your Modified Adjusted Gross Income (MAGI). This can be accomplished through:

1. Charitable giving strategies 
2. Tax-deductible retirement account contributions
3. Tax-free income
4. Tax-efficient investments
5. Tax-efficient withdrawal strategies

Addressing the impact of the IRMAA surcharge requires careful analysis of Medicare costs, income thresholds, and long-term financial planning. 

By proactively evaluating these factors you can optimize your portfolio and minimize your income and tax related penalties throughout retirement.

Fill the Gaps

Do you know what your financial plan is missing? If you have $1 million or more of investible assets and are in or close to retirement, let's connect and discuss the factors to consider when reviewing your healthcare costs and long-term planning.