When you’ve been in business as long as we have and you’ve helped as many retirees and soon-to-be-retirees with their planning as we have, you hear a lot of the same questions. We thought it would be a good idea to answer a couple of these repeated questions every week.
Please note this very important fact. Our answers do not take into account your particular investment objectives, financial situation, or risk tolerance and may not be suitable for all investors. Our answers are not financial advice and should not be taken as advice. This material is provided for educational purposes only.
What is IRMAA and could I pay higher Medicare premiums?
Somewhere along the line, folks got the idea that Medicare was free. So the idea of paying for Medicare premiums, or paying more for their Medicare premiums, throws some folks for a loop. IRMAA, short for Income-Related Monthly Adjustment Amount, is a surcharge (read: penalty) added to Medicare premiums for Parts B and D based on the claimant’s modified adjusted gross income (MAGI) two years prior.
That’s a lot to take in, so let’s break it down. First, a recap of Medicare and its parts:
| Medicare Part | Summary of What Is Covered | Monthly Premium Cost |
|---|---|---|
| Part A | Hospital Insurance – covers inpatient care in hospitals, skilled nursing facilities, hospice care, and home health care. | $0 if worked 40+ quarters $311-$565 depending on work history |
| Part B | Medical Insurance – services from doctors and other health care providers, outpatient care, home health care, durable medical equipment, and preventative services. | $202.90 + IRMAA Can be as high as $689.90 due to IRMAA surcharges |
| Part D | Drug Coverage – pharmacy drug coverage, will vary by plan | Varies, plus IRMAA surcharges up to $91 |
| Medigap | Extra insurance you can buy from private companies that helps pay your share of Medicare and fill in gaps. | Prices vary depending on plan |
| Part C Medicare Advantage | Private insurance acting much like an employer-provided PPO plan. | Prices vary depending on plan |
So right off the bat, yes you have to pay for Medicare. For standard Medicare—which is commonly considered to be Part A hospital coverage, Part B medical coverage, and Part D drug coverage—you will pay for Parts B and D. If you add a Medigap plan, you’ll pay for that, too. If you opt for Medicare Advantage, which is a private alternative to Parts A, B, D, and Medigap, you will pay for that as well.
If your Modified Adjusted Gross Income (MAGI)… or line 11 on your 1040 with a few deductions added back… was high enough two years ago, you will also pay the IRMAA surcharge. How are those determined? Here is the IRMAA table for 2026, which is based on MAGI from 2024.
| Filing Single | Married Filing Jointly | Married Filing Separately | Part B Premium | Part D Surcharge |
|---|---|---|---|---|
| Less than $109,000 | Less than $218,000 | Less than $109,000 | $202.90 | +$0 |
| $109,000 to $137,000 | $218,000 to $274,000 | N/A | $284.10 | +$14.50 |
| $137,000 to $171,000 | $274,000 to $342,000 | N/A | $405.80 | +$37.50 |
| $171,000 to $205,000 | $342,000 to $410,000 | N/A | $527.50 | +$60.40 |
| $205,000 to $500,000 | $410,000 to $750,000 | $109,000 to $391,000 | $649.20 | +$83.30 |
| More than $500,000 | More than $750,000 | More than $391,000 | $689.90 | +$91.00 |
So the question now changes from “Could I pay higher Medicare premiums?” to “How do I not pay those higher Medicare premiums?” And it’s a valid… and common… question.
If you file for Medicare, you’re going to pay Medicare premiums. You can try and continue on you or your spouse’s employer plan and, provided the company is large enough, that might hold the high premiums off for a little bit. If you’re a Fed, you can keep your FEHB coverage and never file for Medicare. Depending on your MAGI and your chosen benefits, that might be the more affordable option. You can try to hang onto your ACA plan and not file for Medicare, but more than likely Medicare will be cheaper than that. And you can just not file for Medicare… which is technically an option so long as you never get sick or need medical coverage… but you’ll pay heavy penalties once your body breaks down and you do finally file for Medicare.
How do you avoid higher premiums due to IRMAA? You keep your MAGI down. And how do you keep your MAGI down? There are plenty of ways, but we can’t discuss them here. They all require personal information and a deeper level of conversation than we can provide in a blog article.
Regardless, if you find yourself asking these deep questions about your post-retirement medical coverage and you have questions, reach out to one of us here. We can help!
How much should I be saving each year once I turn 50?
Not too many people look forward to turning 50. It’s a milestone birthday to be sure, but it’s more likely to be dreaded than be anticipated. But turning 50 is a big year—it’s when a lot of folks feel like they’ve entered the “back nine” or “second half” of life and they really start to think about retiring.
And with thoughts of retirement comes a second, more worried, wave of thoughts… mostly on how to afford retirement. And so the question becomes, how much should I be saving each year once I turn 50? Or how much CAN I save every year once I turn 50?
Luckily, that’s a short answer: as much as you want, or as much as you can. In terms of where you can save that money, those questions can be answered by the Federal government.
For employer-sponsored retirement accounts (like 401(k)s, 403(b)s, 457s, TSPs, etc.):
- Everyone working can contribute up to $24,500 in 2026
- Everyone 50 years old or older can contribute an extra $8,000 as a catch-up contribution, for a total of $32,500.
- Those 60-63 years old can contribute an additional $3,250 on top of the $8,000 as a sort of super catch-up, for a total of $35,750.
With employer-sponsored accounts, don’t forget the new rule in place starting in 2026 for high earners, which the government considers to be anyone making over $150,000. If you are a high earner according to Uncle Sam, any catch-up… that is, anything above that initial $24,500… must be made to the Roth portion of the retirement account. If an employer does not offer Roths, their employees cannot make any catch-up contributions above $24,500.
For IRAs and Roth IRAs:
- Everyone with sufficient earned income can contribute up to $7,500 to their IRAs or Roth IRAs in 2026.
- Everyone with sufficient earned income and above the age of 50 can contribute an extra $1,100 to their IRAs or Roth IRAs in 2026, for a total of $8,600.
All additional savings must be made outside those tax-advantaged accounts. Whether it’s bank accounts, brokerage accounts, or any sort of non-financial investment (homes, art, really rare Garbage Pail Kid cards, etc.) There are no boosts or benefits to these savings vehicles other than compound interest… meaning they’re invested in with taxed dollars and all withdrawals will be subject to tax… but they do exist.
So again, the answer to the question of “How much can I contribute once I turn 50?” is “as much as you can.”
One quick note… an additional savings vehicle opens up once you turn 55, but there are some conditions. There is another tax-advantaged way to save some money, and that’s a Health Savings Account (HSA). HSA accounts are triple tax-advantaged, meaning contributions are tax deductible (#1), grow tax-free (#2), and withdrawals are tax-free when used for qualifying medical expenses (#3). The big condition is that they’re only available with a high-deductible health insurance plan.
With an HSA:
- Anyone with self-only coverage can contribute $4,400 in 2026.
- Anyone with family coverage can contribute $8,750 in 2026.
- Anyone 55 and older can contribute another $1,000 on top of these figures in 2026, for totals of $5,400 and $9,750, respectively.
While that answers “How much can you contribute towards retirement?” it doesn’t answer “How much do you need?” To know how much you need, you need to know how you plan to retire. And that’s a bigger question than can be answered here.
Need help with retirement planning? You’ve found the right page. Reach out and let one of us know you’d like some help. We’ll be happy to find a time to chat.