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In retirement there is one absolute: you must enroll into Medicare when eligible in order to receive your Social Security benefit. Failure to do so will lead to a forfeiture of all current, future and past Social Security benefits.

The other absolute is that your Medicare premiums, the bulk of them, are deducted directly through your Social Security benefit.

Medicare also happens to be “means tested” through the Income Related Monthly Adjustment Amount (IRMAA). This means that when you enroll into Medicare if you happen to be earning “too much income” there will be added surcharges on top of your Medicare Part B and D premiums.

Income is defined as:

“Adjusted gross income plus any tax-exempt interest” or everything on lines 2a and 8b of the IRS form 1040.
Some examples of income are:

Some examples of what may not count as income in terms of Medicare’s IRMAA are:

In retirement, your income, especially your Social Security benefit, due to IRMAA, will depend on your income.

In order to control your mandatory health costs as well as save a large portion of your Social Security benefit, properly planning to generate the right type of income is a must.

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