Retirement Transition Lesson # 1

I retired in 2023. There were some things I learned during my transition that would have been nice to better understand several years before I retired. Perhaps my “school of hard knock” lessons will help your retirement planning and transition.

Who Is IRMAA?

Irma Louise Bombeck was an American humorist who achieved great popularity for her newspaper humor column describing suburban home life, syndicated from 1965-1996. IRMAA (income-related monthly adjustment amount) is an income-related monthly adjustment (fee) you may have to pay on top of your basic Medicare Part B (medical insurance) and Part D (prescription drug plan) premiums. IRMAA impacts those with income over $106,000 (filing individually) or $212,000 (filing jointly). IRMAA is sometime called Medicare’s “Shadow Tax”.

Irma Bombeck was funny. On the other hand, I didn’t find much humor learning how IRMAA impacted my retirement timeline.

The good news is I was fortunate to have enough income in certain years to make IRMAA a factor I needed to understand. The bad news is the IRMAA calculation didn’t work out well for my specific retirement timing and age.

When you enroll in Medicare (at age 65), the basic cost is the same for all enrollees. But based on the IRMAA tables (see link below), you may have to pay additional fees to maintain your Medicare benefits. I enrolled in Medicare effective August 2025. For my specific scenario, IRMAA was therefore calculated based on my 2023 (two years prior) Modified Adjusted Gross Income (MAGI).

Unfortunately for me, 2023 was my last full year working and it also reflected the highest income of my career. It might have been worth adjusting my retirement year to a year earlier or maybe even a year later (based on IRMAA calculations only). I probably wouldn’t have changed my overall plan, but I would have considered this factor more heavily before finalizing my retirement date.

There is an appeal process that considers major life events (like retirement). I am currently working through that appeal process to get my IRMAA fees lowered. It should work out better than the initial Medicare fee determination (based solely on 2023 income).

My recommendations:

1.      Learn more about IRMAA to see if this could impact your retirement planning.

IRMAA Brackets 2025: What They Are and How They Work - NerdWallet

2.      Learn more about Medicare and Social Security enrollment. There is a lot to understand, and it is worth some time to dig deep.

a.      Try this free tool to optimize your Social Security strategy.

b.     Open Social Security: Free, Open-Source Social Security Calculator

Hopefully this will help a few of you as you plan for retirement. I plan to post at least one more blog to tackle another retirement planning topic: Roth vs Traditional IRAs.