5 Tips for Retirees- Tip 2- Medicare Planning

In this video, Matt and Chris discuss the importance of Medicare planning, particularly focusing on Medicare Part B and Part D. They emphasize that these costs depend on your income from two years prior, making proper planning essential. They provide an example where a couple with higher income pays significantly more for Medicare than those with lower income. They suggest strategies like Roth conversions to manage income levels effectively and avoid surcharges. They also mention the widow penalty, where rates can change if a spouse passes away. They offer assistance in planning to minimize Medicare costs for retirees.

Video Transcript

Hello, Matt with EWA. Chris with EWA. Today we are talking about Medicare planning and specifically how Medicare cost, if not planned for properly, could cost you $250,000 plus during your retirement if the right plan is not in place.

So, Chris, walk us through some of the numbers and the importance of the Medicare landscape. Absolutely. So what we’re going to be talking about in today’s video is Medicare Part B and D. Part A is already included if you’re claiming Social Security.

And Part C is generally something that you got to go to the marketplace to get. So both of these, part B and Part D are both dependent on what your income was looking back two years ago. So what you’ll pay in 2022 is dependent on what you showed on your 2020 tax return.

Interesting. Chris so give us some examples of let’s say a client needs to spend $20,000 a month net of taxes and that means that their adjusted gross income is $400,000. What Medicare cost would each spouse pay if it was married filing jointly?

Couple yeah. So in that example they would pay 544 for Part B and then for Part D there’d also be a surcharge and they’d pay 71 30 per month. Yikes. So the average person married couple that’s making under 180,000 of adjusted gross income is paying 170.

You said that’s 544. So that’s over three times the cost. So how do we put a plan in place to potentially avoid those surcharges? Excellent question. So whenever you’re retired, you’re going to have all these different income sources like let’s say Social Security, maybe a pension.

Um. Distributions from IRAs, which are taxable. Very important that we’re doing the right planning ahead of time, specifically with Roth conversion planning. Because if we look ahead and we forecast this properly, we can have the right mix where we’re pulling from these different streams and we can make sure that you’re always in these lowest tiers for Part B and Part D to save you money each month during retirement.

I guess one other thing to look. At is what happens to the rates. If it’s, God forbid, a death in the family and it goes from two spouses to one. Spouse, how do the rates get determined then? Great question.

So if we again look at the chart here, married versus single, the single runway that we have for these premiums is cut in half. It’s referred to as the widow penalty, which we mentioned in the previous tip.

So again, very important that we’re looking ahead and doing this planning ahead of time to prevent costly mistakes in planning well. Any questions on Medicare planning or how to avoid these significant surcharges or hopefully lower the pain and pay as little as possible for a system that you’ve paid tax on.

Already for your entire working. Life? We are here to help. And we’re. Here to help a plan. Into place to make. Sure that the Medicare costs are as low as possible for you and your family.

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5 Tips for Retirees

5 Tips for Retirees- Tip 1- Tax Bracket Management
5 Tips for Retirees- Tip 3- Social Security Do's and Don'ts
5 Tips for Retirees- Tip 4- Exercises to Prepare for Retirement
5 Tips for Retirees- Tip 5- Set After Retirement Goals

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