Countdown to retirement

Miscellaneous and Personal Stuff I Must Share
961

That’s good. I’ve not lost a minute of sleeping worrying about money since I retired.

As for my kids, one has saved enough to be able to basically retire at 40 (we’ll see how it goes) and the other is okay. I wouldn’t want to give money to one and not the other. Now, if either of them needed it, I’d be happy to help. And we plan to pay a lot for our grandkids colleges. I had almost no student debt (back when I went to college it was a lot cheaper) and we paid for our kids. Not graduating with college debt is the best thing we can give them. We’ve put money in college accounts already.

962

I snipped that part out.
This is one of the reasons my wife and I like chess and cribbage. Played three games of chess last night.

963

I’ve said before that while I don’t have a fundamental problem with CG taxes, it’s really frustrating that with a regular investment account becoming the primary vehicle for my retirement savings (I have a bit of an odd situation and no access to things like 401k), any rebalancing or risk management makes me take a tax hit. It really drives me nuts.

964

I am definitely going to have to find a social group to spend my time with. I’ve been coasting on work and chores to fill my time since my friends all moved out of state.. Once that’s gone, I will turn into a fat vegetable if I don’t’ start doing something like getting back into gaming or some such. The local game stores might start seeing me a lot.

965

That’s why I joined the Dope!

My local Senior Center features board games and card games, if that interests you.

966

I walk through my neighborhood every day. I’m 61 and I’ve lived here since I was 29. There’s a very nice retirement community a few blocks from my house and sometimes I walk through it. The other day one of the employees drove by on a golf cart and asked if I needed a ride to the dining hall. I was offended at first until I realized that you need to be at least 55 to live there.

967

Well, even those of us who don’t “need” it, sure do appreciate a little more. We have a couple of kids who are doing fine, but sending them a check once a year takes some pressure off.

No, but they might enjoy it in the short run.

968

I was a regular on the San Jose State University campus for about six months getting a tech writer certificate at age forty-five and I felt ancient then.

969

The one thing I’d worry about with this is - what if that rescue closes up shop before you find yourself needing them (if you do end up needing them)? If they’re a non-profit, you can of course look at their financials to see how they are doing now, but 10-20-30 years down the road might be a different story, and of course they can close for other reasons as well.

You can create a trust for your nephews and nieces, and for the ones who aren’t so good with money, limit how much they get and/or what they can do with it. Look up ‘spendthrift trust’ to see what I mean about the latter.

970

Here’s a vexing story about IRMAA that is a cautionary tale for everyone approaching their own retirement. Since we each only really retire once, we never get very good at it. So one person’s experience navigating the transition can be useful for others.


Explanation of IRMAA for those who don't know what it is and how it works ...

IRMAA (Income-Related Monthly Adjustment Amount) is a special tax on Medicare for folks who have incomes at and above, say, white collar upper middle class. Basically it’s a way for the Feds to charge a higher premium for your Part B and Part D coverage based on your ability to pay a higher premium. The more you make, the higher the IRMAA top-up premium. There are 6 premium “buckets” from “no extra premium” to “lots of extra premium”. And each bucket has an applicable taxable income range that also depends on whether you’re single or married filing jointly. Ok, so a progressive tax and a Progressive idea. No complaints here; just a little good-natured grumbling from me despite paying a bunch extra.

They figure your IRMAA premiums for the entire calendar year based on your tax return for 2 years ago. So 2026 premiums being decided now in late 2025 are based on 2024’s tax return that you filed in early 2025. Which works fine if your income is stable year to year, or at least stays within the fairly wide range of the same bucket each year.

The idea is actually that your 2026 premiums should reflect your 2026 earnings, but they’ll use 2024 as a proxy, because that’s the latest income records they have access to. There’s a form you can file to tell Medicare / SSA that your income has changed a bunch, so the two-years-ago method gives a wrong result in your personal case. This is very commonly used in the year you retire and/or the one just after as your W-2 and hence taxable income craters as it typically does for most workers.

With the form, instead you tell them what you estimate your e.g. 2026 income will be and they take your word for it. At least until a couple years later when you file your 2026 tax return and then they cross check whether your estimate was accurate or not. If you estimated low, you now own them the difference between the IRMAA you did pay (maybe even zero) and the larger IRMAA you should have paid. Fair enough, if a tad inconvenient.

Now comes the vexing tale.

Well, I retired towards the end of 2023. My 2021, 2022, and part-year 2023 taxable income (mostly W2) and married status put me in a high IRMAA bracket for IRMAA years 2023, 2024, and 2025 respectively. But my W2 was going to be zero in 2024 & subsequent. I’d have some taxable income from investments and social security, but not enough to trigger IRMAA. Or if any, it’d be the lowest bucket and only a smidgen of extra premium.

So I filed the form predicting 2024’s taxable income to be below the IRMAA threshold for married folks, they believed me, and they charged me no IRMAA in 2024. So far so good.

But… [cue ominous music]

In 2024 my former employer paid out a bunch of back wages due to a court case finally wrapping up. And at year end I decided to take a distribution from my IRA to take advantage of my semi-low income tax bracket before RMDs start in a few years. Both of which bumped my taxable income. Oops. And between Jan & Dec I left my wife and got divorced, so I dropped from the higher threshold income buckets for married filing jointly to the much lower threshold income buckets for filing singly. And thereby catapulted myself from my planned-for zero IRMAA bucket into the highest IRMAA bucket. Oops^2.

I knew they’d almost certainly eventually figure out this discrepancy, and “eventually” is this month. I just got a snail mail from SSA. “You owe us a few thousand dollars. You can pay us now, or we’ll confiscate all your SS benefits until we’ve gotten back what you owe.”

Oops.

That would really suck to have that happen to somebody who needed that cash and/or cash flow. To be sure, people paying any IRMAA are fairly comfortable on an absolute scale. But it doesn’t matter how big your income is, there are people making that income and still living hand to mouth because they can’t stop spending everything they make on monthly payments for stuff they already bought.

Don’t let that happen to you. “That” being either “Well-off and hand-to-mouth”, or “Overfile for reduced IRMAA you won’t really qualify for”.

971

Good piece of advice. Now I’m even more glad about my pre-tax 457 account.

972

You earned the slow pace after so many years of steady work. Focusing on health first is smart because it shapes everything else you want to enjoy. Getting back to the gym and catching up on appointments will give you a clean start. The rest of your days will fill themselves once you settle into the new rhythm.

973

20 more work days and I’m done

My wife just retired. We have plenty to keep us busy. Last night 3 games of chess and two of darts. We also play Cribbage. Sometimes Rummy.

We also just bought a new house, we are mostly settled in. We have room for a garden, there is already a raised bed.

My wife is joining a womans group that donates to local charities/food banks whatever. They all vote on who to give to. 4 meetings a year, each person kicks in $100

My wife also may volunteer at a local horse rescue. I might too.

Oh, and we just bought a very nice Yamaha electric piano. We are signed up for lessons. Haven’t started yet, I’m going to wait until I’m fully retired. I work from home, I guess at this point I’m sort of semi-retired.

974

enjoy those 20 “no fucks were given” workdays …

975

If you don’t mind, do you know the form you used for this? My wife will sign up for Medicare in 2027. This year, our income will be really high due to a one off event, but it’s extremely unlikely that will happen again and I would like for Medicare to consider our 2026 income rather than 2025 for IRMAA. So I will have to do the same thing, otherwise we will pay the top tier IRMAA surcharge for her in 2027.

976

From Social Security Forms | SSA you want Form SSA-44.

977

Heh, heh. I’m even pretty much done training people on all my projects and updating our internal wiki.

Our projects can take months or sometimes years to complete, so l’m just going through and deleting old unneeded data. I’ve been there for 33 years.

978

why restrain yourselft to “old unneeded”, when you can go the whole 9 yards …

:winking_face_with_tongue:

979

Quoting myself for context …

The other shoe has not yet dropped on my paying them back the IRMAA charges I didn’t pay in 2024.

But I did just get my new 2026 SS benefits letter via their website. My SS went up for inflation. But the IRMAA went up more since medical cost inflation is higher than CPI inflation.

My take-home SS will be $3 per month less in 2026 than it was in 2025. I expect this same outcome for most Americans who are subject to IRMAA, or at least the higher tiers of IRMAA.

Sigh.