There is a lot to consider when planning tax management in retirement. You’ve got to think about RMD’s, tax brackets, Medicare, and IRMAA. You may have heard of IRMAA and been wondering just what this mysterious acronym is. On this episode of Retirement Answer Man, you’ll learn about Medicare and IRMAA and how exactly this all fits into your retirement tax management plan. You need to understand all the levers available to make the most of tax management in retirement. 

Highlights I’ve learned over the past 300 episodes

• Consistency is so important. My daily habits keep me on track
• You all have helped me learn how to define the agile retirement planning process. 
• My team is amazing!
• Listeners provide the ultimate feedback loop. We have created a safe place to interact and have discussions surrounding retirement. We have listeners from all over the world!
• I know my purpose and I’m acting it out each day.

Can this exercise help you consider if you are ready for retirement?

I recently had a client that didn’t think he was ready for retirement. He thought there would be a huge void in his life. How would he spend his days? So to get an idea about this he decided to make a list. Not a bucket list, but a list of things he wanted to do with his time. Things like: practice playing guitar, learning to play golf, mentoring kids. These were just some of the day to day items he considered. Next, he decided to map out an ideal schedule for an entire month. Find out what he discovered by listening in!

Who is this IRMAA, and why is she in my Medicare?

In 2007 Congress passed a law allowing a surcharge on part of your Medicare benefit if you make over a certain amount. IRMAA is that surcharge on Medicare Part B and Part D. If you make over $85,000 if you are single or $170,000 if you are married then IRMAA will apply to your Medicare Part B and D. One important aspect about IRMAA is that it considers your income, not from last year, but from 2 years ago. Listen in to find out how much this surcharge is. 

What are some tax strategies you can implement to avoid IRMAA?

The number one rule of tax management is: don’t let the tax tail wag the dog! You will need to consider if IRMAA is worth all the trouble to avoid. Consider these strategies to see if they can help you avoid the IRMAA surcharge.

• Be aware of temporary spikes in income, be more thoughtful about how you spend money as you approach Medicare age.
• Be aware of your required minimum distributions (RMD). You’ll want to be aware, from a tax perspective, but now you can consider IRMAA as well.
• Use Partial Roth conversions now to try and minimize your RMD later on
• Multi-year tax planning so important in retirement because you finally have ultimate control over your taxes
• Start to build some balance in your balance sheet.
• Consider funding your HSA early on. You can keep the bills for years and create a tax-free slush fund. 
• If you don’t need the extra income, but have to take it due to RMD, do a qualified charitable distribution to minimize your income.

How will IRMAA affect you? Will you jump through hoops to avoid it?

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN HOT TOPIC SEGMENT

• [3:30] Highlights I’ve learned over the past 5 years
• [6:12] Do I really want to retire?

PRACTICAL PLANNING SEGMENT

• [9:30] Who is IRMAA?
• [16:00] How will IRMAA affect you?

THE THANKFUL LAB SEGMENT

• [21:56] I’m thankful for being brave

TODAY’S SMART SPRINT SEGMENT

• [24:02] Take our annual listener survey!

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center