The decision to retire can create a sense of relief, joy and hope for the future. It can also leave you feeling anxious and unsettled. Going forward without the traditional source of income you’ve relied upon for years, possibly decades can be an adjustment. Without careful planning, unexpected costs can be a calamity.
The shifting cost of Medicare
Many retirees rely on Medicare. People expect Medicare costs to be relatively stable and budget accordingly. What they may not realize is that some financial decisions can drastically impact Medicare premiums from one year to the next.
Income-Related Monthly Adjustment Amount
Otherwise known as IRMAA, the Income-Related Monthly Adjustment Amount changes Medicare premiums for people who qualify as high-income retirees. The income levels necessary to trigger IRMAA are changing in 2018. Some people could see their premiums go up by 50 percent or more because of the change.
Some retirees may be thinking that their income is set, but they need to account for things like the sale of a home or taxable assets. While such a move would only change Medicare premiums for the following year, one year is enough to throw a person’s plan out of alignment. It is important to work with a financial and estate planning professional who understands how each move impacts the overall picture.
Retirement can be a wonderful experience, leading to an exciting new chapter in life. The key to to prepare carefully and properly to deal with the many factors involved in making the change.
Source: Investment News, “Medicare surcharge notices are shocking retirees,” by Mary Beth Franklin, 5 December 2017