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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire On Time, which you can grab today on Amazon or by going to www.howtoretireontime.com. My name is Mike Decker. I'm the author of the book, How to Retire On Time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to discussing financial topics, we can cover it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational, as in not financial advice. If you want personalized financial advice, then request your wealth analysis today from my team by going to www.yourwealthanalysis.com. With me in the studio today is David Transon. David, thanks for being here. Yes.
Mike:Glad to be here. David's job is gonna be reading your questions, and I'm going to do my best to answer them. You can submit your questions in by either texting them to (913) 363-1234. That's (913) 363-1234, or you can email them to heyMike@howtoretireontime.com. Let's begin.
David:Hey, Mike. In what situation would I need to worry about IRMAA, and what can I do to avoid those surcharges?
Mike:So if you're single, it's if your total taxable income is around a hundred, just over a hundred thousand, and that's oversimplified because you do have the standard deduction, and Social Security may be considered tax we have we're gonna figure out what that looks like for the IRMA calculation in the near future. We're waiting a couple of bills to be passed, but generally speaking, it's your total taxable income. And if you're married, it's just over 200,000 if you're filing jointly. That's the IRMAA situation. Now for IRMAA planning, which I think it's unnecessary if you can help it to not pay an extra $74 a month per person Yeah.
Mike:In retirement, so there's just a lot that you gotta kinda figure out. First off, how much do you have in pretax dollars? How much do you have in pretax dollars is going to determine, I mean, really, how much do you need to minimize from IRA to Roth? How are you gonna take your income? What's your income levels?
Mike:And so on. If you're 60 years old, and you can do some IRA to Roth conversions, and then at 65, that you're able to take enough pre tax dollars below a certain threshold that you don't trigger IRMA, that's an efficiency. Okay. That's a nice situation. Maybe you're past the age of 65, and you're just kinda stuck paying Irma.
Mike:That's okay. Be a little bit more aggressive then, and do some more aggressive IRA to Roth conversions, and then get it down to where you can be more balanced in your conversions. Mhmm. It's all about balance, but basically, you've got between fifty nine and a half to sixty five years old that you can be more aggressive in your IRA to Roth conversions. Even if you're still working, you might consider doing that.
Mike:Now if your salary, your your w two income is greater than your retirement income, maybe you don't. There's some nuance here. Yeah. But the idea is that you can take your taxable income below a certain threshold and not pay the IRMA surcharge if you can help it. Now don't live a life below the IRMA surcharge.
Mike:Mean, live your best life. That's the primary objective. Yeah. You find the efficiencies within this. If you are doing both conversions while you're working, or maybe you recently retired, you can step into IRMA for a little bit, and then just let them know that you had a significant change.
Mike:Let's say you retired or something happened, and that you're not going to be paying IRMAA anymore. You can contest the IRMAA charge proactively, and then get that dropped. Just gotta be honest. Do not lie or manipulate Social Security or Medicare. I mean, be honest in all of your dealings, especially those that have to deal with federal government programs.
David:Yeah, good advice.
Mike:Yeah, but I mean, maybe you, in the age of 63 and 64, you did aggressive iron to Roth conversions, and then in your 60 year of life, you retired. Don't pay IRMAA when you're 65 and 66 years old. Say, hey, I retired. Here's what my taxes are expected to be. That's $74 or so per person at least, per month, per person that that's a nice meal out.
Mike:Yeah. Every dollar counts. For sure. But, yeah, it's just deliberate planning that kind of allows you to demonstrate that. But you fix Irma, or you plan around Irma through IRA Roth conversions and income planning.
Mike:And by the way, one last thing too on this. This is why I say it's so important to have income flexibility. There are people that may be stuck in IRMAA because they put too much into an annuity and turned on income at too high of a rate. Oh, well. So again, it's you wanna have flexibility Mhmm.
Mike:With your income strategies. You wanna have flexibility on where your income comes from, whether it's from a pretax source like an IRA, an after tax source like your brokerage account, or a tax free source like a Roth IRA. Mhmm. But you wanna have flexibility so that if legislative risk changes, let's say IRMA just changes their brackets, you've got to be able to adjust in the future. And that's one of the many reasons why I suggest that planning your entire retirement around the guaranteed life income that's rigid, and Right.
Mike:Is it inflexible? Is that a word? Inflexible? That sounds right. Unflexible?
Mike:Not flexible? Yes.
David:That's the main driving point.
Mike:You wanna have flexibility. Can't flex it. Yeah. You can't flex. You wanna have flexibility in your plan.
Mike:You wanna have flexibility in your income strategies, and you wanna have flexibility to dynamically react based on legislative risk, which includes Medicare Uh-huh. And how the taxation and these surcharges could be structured in the future, because no one knows the future. So you wanna be able to adapt towards the ever changing environment and the future. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast.
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Mike:Go to www.yourwealthanalysis.com today to learn more and get started.