Why did your Medicare premium go up so much (watch video here)? It could be because of your income. In this interview with Lance Otey, a health insurance expert in the Dallas-Ft. Worth area, we discuss how your income can affect your Medicare premiums.
Surprise, your Medicare premium just increased by 50%! How can this be? One likely reason is your income. In 2020, the base Medicare premium is $144.60. However, if your Modified Adjusted Gross Income (MAGI) was above a certain amount 2 YEARS AGO, you could pay more. The threshold this year is $87,000 if filing individually, or $174,000 if filing a joint return. The base premium for Part B is expected to increase to around $150 per month in 2021.
One of the biggest questions for someone entering retirement is how they can generate the income they need during their golden years. Not only are there tax implications of withdrawing from your 401(k) or claiming your pension, there are also other ramifications such as a potential increase in your Medicare premiums.
This is where a good financial planner can come in handy. It is often the case that a retiree will have many different sources of income. This may be through a pension, annuity, 401(k), IRA, brokerage accounts, or a Roth IRA. Each of these income sources, and their underlying investments, can affect the income you claim on your tax return. Not only can this affect the amount of taxes you pay, but it can also impact your Medicare premiums. Withdrawing from your accounts without regard to these consequences can impact how long your retirement nest egg may last. Having a well thought out distribution plan in retirement is crucial to the longevity of your retirement savings.
If you need help devising an income strategy in retirement that takes all of these factors into consideration, please reach out to us today!