TRANSCRIPT:

What if just one extra dollar of income could raise your Medicare premiums by thousands of dollars every year? And nobody tells you about it until you get the bill in the mail.

That’s exactly what happens to retirees who get hit by something called IRMAA, the income-related monthly adjustment amount.

I’m Hunter Brockway with Boca Retirement Strategies, and today we’re uncovering a sneaky tax trap that’s catching even smart retirees off guard and showing you how to avoid it.

So, let’s start by explaining what this trap actually is and how $1 can make such a huge difference.

What is IRMAA and why it matters?

IRMAA stands for income-related monthly adjustment amount. It’s the government’s way of saying if you make more money, you’ll pay more for Medicare. Specifically, it applies to Medicare Part B doctor visits and Medicare Part D prescriptions.

Once your income, or more precisely, your modified adjusted gross income, MAGI, crosses certain thresholds, your premiums jump sharply.

Think of IRMAA like a staircase, not a ramp. Step over the line by even $1 and boom, you’re into the next tax bracket.

Even modest extra income like a Roth conversion, capital gain, or side hustle can trigger it.

This video got you thinking about your own retirement planning. I’d like to offer you something to help you see the bigger picture.

We’ve created a tax-smart comprehensive retirement workbook for pre-retirees and retirees.

If there’s one thing I’ve noticed in my years of working with individuals, it’s that there’s always at least one aspect in the planning process where they say, “Hm, I haven’t thought about that before.”

No matter how smart they are, how much they’ve saved, something comes up, whether it be they realize they can spend more than they thought they could. They realize their tax bill is going to be high in retirement. They are going to leave money on the table with their current Social Security claiming strategy.

This workbook is designed to help you walk through the most critical areas of retirement planning with action steps, false beliefs, and areas for you to input your own reflection items.

You can download the workbook by going to the link below in the description. If you have any issues with that link, send us an email at contact@bocaretirement.com.

If you get through this workbook and you’d like your responses reviewed or have any questions, I’m happy to have that conversation with you, too. As always, this is no cost, no obligation, and no pressure.

Best of luck.

Let’s take a real example.

One of my clients, we’ll call him Bob, retired with a pension, Social Security, and a small IRA. Bob picked up a side consulting gig that paid $15,000. Not bad, right?

But that $15,000 pushed his MAGI just $1,200 over the IRMAA threshold. The result, his Medicare premiums jumped over $3,000 for the year.

And because IRMAA is based on your tax return for two years prior, he didn’t even know it was coming.

That’s why so many retirees get blindsided.

It’s not that they made a lot of money, it’s that they made it in the wrong way at the wrong time.

So, what can you do?

Step number one, project your retirement income and MAGI.

Start by estimating what your MAGI will be. Not just your taxable income, but including things like IRA withdrawals, capital gains, and interest.

Most retirees forget that even tax-free muni bond interest counts toward IRMAA.

Step number two, model the IRMAA thresholds.

Pull up the current IRMAA table and highlight where your income lands. Draw a red line at the threshold. Then ask, “What if I go $1 over?”

Sometimes that $1 can mean an extra $1,700 to $3,000 in premiums.

Step number three, adjust timing or income sources.

This is where planning pays off.

Shift Roth conversions to lower-income years, split large distributions across tax years, or delay a side gig or capital gain to stay under the threshold.

In short, delay, split, convert.

Those three moves can save thousands.

If you want to see exactly how to plan your tax-smart retirement income, download our free tax-smart retirement workbook. The link is in the description below.

To recap, IRMAA is the Medicare premium surcharge for higher income. Even small income spikes from RMDs, Roth conversions, or investments can trigger it.

With simple planning, you can control when income hits your tax return and potentially save thousands every year.

So, before you sell stock, convert an IRA, or take a big withdrawal, check where you stand.

If you’d like help running the numbers or coordinating your Social Security, Roth conversions, and Medicare, visit our website to schedule a call. We combine all key levers of retirement to coordinate together.

I’m Hunter Brockway with Boca Retirement Strategies.

Enjoy your successful retirement with more money, less stress, and fewer taxes.