Here’s some information about Medicare that’s rarely discussed: Medicare imposes surcharges on higher-income beneficiaries!
There are five brackets, and depending on the income level, higher-income beneficiaries pay 35%, 50%, 65%, 80%, or 85% of the program costs instead of the average 25%. The surcharge is called IRMAA, which stands for Income-Related Monthly Adjustment Amount.
The lines drawn for each bracket can cause a sudden jump in the premiums you pay. If your income crosses over to the next bracket by only $1, all the sudden your Medicare premiums can jump by over $1,000 per year. If you are married and both of you are on Medicare, $1 more in income can make the Medicare premiums jump by over $1,000 per year for each of you!
Medicare is just one reason why we need to talk about your overall retirement plan and income strategy at least 5-10 years before you retire.
Why? Because the income used to determine your cost is your income from two years ago. For example, the income on your 2021 tax return (filed in 2022) determines the IRMAA you will pay in 2023.
Here are more details about Medicare’s IRMAA income brackets: https://thefinancebuff.com/medicare-irmaa-income-brackets.html
Be sure to contact Dawn Potts, AIF® well before you want to retire so we can put together a complete retirement income strategy. Call (913) 320-2069 or schedule an appointment directly online: https://calendly.com/dpotts29
