In the landscape of retirement planning, few financial surprises hit as hard as IRMAA (Income-Related Monthly Adjustment Amount). This Medicare surcharge can add thousands to your healthcare costs annually, yet many retirees don't see it coming until it's too late. At MOKAN Wealth, we believe in proactive planning to help you keep more of your hard-earned retirement savings.
What is IRMAA and Why Should You Care?
IRMAA is a Medicare premium surcharge that applies to higher-income retirees. Unlike standard Medicare premiums, IRMAA can significantly increase your healthcare costs, potentially adding $6,300 or more per person annually.
The most important thing to understand about IRMAA is its two-year look back period. Your 2025 Medicare premiums will be based on your 2023 Modified Adjusted Gross Income (MAGI). This means financial decisions you make today will impact your Medicare costs two years from now.
For 2025, the standard Medicare Part B premium will be $185 per month, but with IRMAA, you could pay up to $443.90 per month for Part B and an additional $85 per month for Part D.
2025 IRMAA Thresholds to Know
IRMAA begins to affect:
- Single filers with MAGI over $106,000
- Married couples filing jointly with MAGI over $212,000
The surcharges increase at various income tiers, with the highest premium increases affecting those in the top bracket potentially adding more than $530 per month per person.
How to Plan Ahead
To reduce your IRMAA exposure, focus on tax-efficient retirement planning. The Five Seed System™ at MOKAN Wealth helps address IRMAA within a broader financial plan:
- Income: Manage withdrawals to stay below IRMAA thresholds
- Tax: Control your MAGI with Roth conversions
- Investments: Proper asset location drives efficiency
- Healthcare: Lower MAGI equals lower premiums
- Legacy: Less tax and IRMAA means more for your surviving spouse and beneficiaries
The Long-Term Impact of IRMAA
While IRMAA surcharges might seem small compared to your overall retirement savings, they add up significantly over time. For a retired couple facing the highest IRMAA tier, the additional cost could exceed $120,000 over a 10-year period.
Moreover, these surcharges are typically paid with after-tax dollars, often from your Social Security benefits, reducing your spendable income even further.
Taking Action
If you have $1–10 million saved in retirement accounts and want to minimize your tax burden, now is the time to develop a forward-looking strategy. The most effective IRMAA planning happens years before you enroll in Medicare.
At MOKAN Wealth, we specialize in helping retirees create comprehensive, tax-efficient retirement plans that address IRMAA, RMDs, Social Security taxation, and more. Our goal is to help you keep more of what you've earned and enjoy greater financial security throughout retirement.
Don't wait until IRMAA surcharges appear on your Medicare premium notice. Proactive planning today can lead to thousands in healthcare savings tomorrow.
Remember: It's not just about how much you save for retirement, it's about how efficiently you use those savings when the time comes.
Disclaimer:
You should always consult a financial, tax, or legal professional familiar with your unique circumstances before making any financial decisions. This video is intended for educational purposes only. Nothing in this video constitutes a solicitation for the sale or purchase of any securities. Any mentioned rates of return are historical or hypothetical in nature and are not a guarantee of future returns. Past performance does not guarantee future performance. Future returns may be lower or higher. Investments involve risk. Investment values will fluctuate with market conditions, and security positions, when sold, may be worth less or more than their original cost. MOKAN Wealth Management is a registered investment adviser with the SEC. Registration of an investment adviser does not imply a certain level of skill or training.
