Managing one's income to stay below the IRMAA Cliff

[NW-Bound]

This sounds exactly like what I did in previous years, being 76 now.
It worked out fine and I have excess income to invest most months which pleases me...

And I have been concentrating my active investing activities on the Roth accounts, which have had higher returns than the IRAs which still match the S&P return over the last 7 years despite not being 100% in stock.
And I neglected my much smaller taxable accounts (15% of total), and only recently looked at their meager returns.

I have been lucky in my investing endeavors. Very likely it's not my skills, but just due to the crazy market, which may exit its schizophrenia anytime.

By the way, when RMD starts, I most likely will stop Roth conversion. My taxable accounts will grow, and I will need to spend time managing them. Nowhere as much fun as trading Roth accounts where no tax concerns keep me from taking fortuitous short-term gains. This brings me to this observation. Maximizing gains is more enjoyable to me than minimizing taxes.

 

[TheWizard]

And I have been concentrating my active investing activities on the Roth accounts, which have had higher returns than the IRAs which still match the S&P return over the last 7 years despite not being 100% in stock.
And I neglected my much smaller taxable accounts (15% of total), and only recently looked at their meager returns.

I have been lucky in my investing endeavors. Very likely it's not my skills, but just due to the crazy market, which may exit its schizophrenia anytime.

By the way, when RMD starts, I most likely will stop Roth conversion. My taxable accounts will grow, and I will need to spend time managing them. Nowhere as much fun as trading Roth accounts where no tax concerns keep me from taking fortuitous short-term gains. This brings me to this observation. Maximizing gains is more enjoyable to me than minimizing taxes.

My Roth conversion for 2025 was a whopping $17,000 which was about all I could do without getting into the next higher IRMAA tier.
I considered stopping conversions at this point but it's gotten to be a habit by now.

And I'm 95+% stock funds in all three portions of my portfolio. Not really doing any short term speculation but I do sometimes dump underperforming funds after consideration...

 

[Mulligan]

I would have likely not even known about IRMAA or the cliffs or the two year look back without reading about it here. I am single and have decided the “line in the sand” is staying under the $137k (2026 scale). I will pay the first level increase but wont go over that.
If I tried to pay the minimum for Medicare B I would be blatantly letting the “the tax tail” wag the dog which is worse than paying the second level premium. I am fortunate that most of my money is in Roths and HSA accounts which doesnt effect the IRMAA. To ensure I stayed under the threshold I put a couple hundred K in IBonds which are indefinitely tax deferred up to 30 years. If I had needed to, I would have put some in a MYGA, but near term I don't think I will have to so I wont.

 

[junkanoo]

I would have likely not even known about IRMAA or the cliffs or the two year look back without reading about it here.

Not uncommon at all. My sister volunteers to help with other people's taxes. Many are completely oblivious to the fact that bond interest or dividend income (that they don't even need) works to increase their Medicare payments.

 

[ShokWaveRider]

IRMAA is definitely not a middle class income problem. It affects somewhere between the top 10%-20% of all senior households. This is high income territory. Average / middle class households don’t pay it.

I would agree with you if one's income floor or wo$king income was at the level I described in the OP. But not IMHO when one is retired has a lower income floor and has to withdraw funds from their stash to make up their income level in a HCOL area. I consider us a typical middle class family slowly approaching Upper Middle Class but not there yet. But as the COL keeps going up, middle class incomes are changing. I personally feel that a lot of folks consider themselves middle class when in fact they are not, they are below the middle class threshold.

Here is some info I dug up from the Web. It is definitely different by State an COL of one's own location.

Middle-Class Income Range in 2026​

The middle-class income range in the United States varies significantly by state. This range is typically defined as being between two-thirds to double the median household income for each state. The upper bound is still fundamentally middle class for a HCOL location.

Highest and Lowest Income Ranges​

State	Upper Bound for Middle Class	Lower Bound for Middle Class	Median Household Income
Massachusetts	$209,656	$69,885	$104,828
New Jersey	$208,588	$69,529	$104,294
Maryland	$205,810	$68,603	$102,905
Hawaii	$201,490	$67,163	$100,745
California	$200,298	$66,766	$100,149
Mississippi	$121,596	$39,400	$59,127

 

[Midpack]

Like some/many here, we both delayed SS until 70 so we could do large Roth conversions right up to the limit of the 1.4X IRMAA tier, so we’ve been paying Medicare 1.4X premiums since I turned 65 seven years ago. With RMDs starting in 2027/2029 for me/DW, it appears RMDs, SS, dividends/passive STCGs and interest will put us in 1.4X Medicare premiums for life. Glad we did aggressive Roth conversions while we could, at least we’re avoiding some 24% marginal and 2X IRMAA. And I fully expect Federal tax rates will increase at some point before we go poof, making Roth conversions beneficial for us. YMMV

 

[Mulligan]

Not uncommon at all. My sister volunteers to help with other people's taxes. Many are completely oblivious to the fact that bond interest or dividend income (that they don't even need) works to increase their Medicare payments.

15 years ago if you had asked me about Medicare, I would have said, “Thats the free health care you get when you are old and have to take it at 65”. Buzz…. Wrong answer… There are a lot of moving parts to all of this Medicare stuff,

 

[Chuckanut]

Not uncommon at all. My sister volunteers to help with other people's taxes. Many are completely oblivious to the fact that bond interest or dividend income (that they don't even need) works to increase their Medicare payments.

Well, I suppose one could say they need the interest and dividend income now to pay IRMAA. Granted, it’s not very comforting. OTOH, I’ve use more medical care these days, and it’s a rare event where I have to shell out more than what is covered by Medicare and my Medigap insurance.

Don’t get me started on the non-inflation adjusted capital gains deduction for selling the family house people have lived in for 30+ years. Or how that affects widowers.

 

[Winemaker]

We have been paying 1.4x since we both turned 65, and had been limiting it up to $250k to avoid NIIT. But our tIRAs are still growing, so we blew past the $250k limit and started limiting investment income. We got rid of the 3 rentals, so that income is gone, and I sold off any shares that could produce a tax loss in our brokerage account. Missed a big ride on Intel, though. The financialbuff.com website predicts that 2028 1.4x limit will be $294k with 3% inflation (2026 income). It's pay me now or pay me later.

If one of us goes room temp, we'll be in the 32% bracket and 2.6x IRMAA tier.

 

[TheWizard]

Like some/many here, we both delayed SS until 70 so we could do large Roth conversions right up to the limit of the 1.4X IRMAA tier, so we’ve been paying Medicare 1.4X premiums since I turned 65 seven years ago. With RMDs starting in 2027/2029 for me/DW, it appears RMDs, SS, dividends/passive STCGs and interest will put us in 1.4X Medicare premiums for life. Glad we did aggressive Roth conversions while we could, at least we’re avoiding some 24% marginal and 2X IRMAA. And I fully expect Federal tax rates will increase at some point before we go poof, making Roth conversions beneficial for us. YMMV

Similar for me except my pension/annuity income bumps me up to 2.0x IRMAA and toward the top of the 24% bracket.
But the water's fine, no problem...

 

[junkanoo]

I would agree with you if one's income floor or wo$king income was at the level I described in the OP. But not IMHO when one is retired has a lower income floor and has to withdraw funds from their stash to make up their income level in a HCOL area. I consider us a typical middle class family slowly approaching Upper Middle Class but not there yet. But as the COL keeps going up, middle class incomes are changing. I personally feel that a lot of folks consider themselves middle class when in fact they are not, they are below the middle class threshold.

Here is some info I dug up from the Web. It is definitely different by State an COL of one's own location.

Middle-Class Income Range in 2026​

The middle-class income range in the United States varies significantly by state. This range is typically defined as being between two-thirds to double the median household income for each state. The upper bound is still fundamentally middle class for a HCOL location.

Highest and Lowest Income Ranges​

State	Upper Bound for Middle Class	Lower Bound for Middle Class	Median Household Income
Massachusetts	$209,656	$69,885	$104,828
New Jersey	$208,588	$69,529	$104,294
Maryland	$205,810	$68,603	$102,905
Hawaii	$201,490	$67,163	$100,745
California	$200,298	$66,766	$100,149
Mississippi	$121,596	$39,400	$59,127

Excellent Post. @MichaelB post has other quite valid takeaways, but yes, location matters.

By us, consider a teacher who worked for 20 years in the NY system (as many did) and then crossed over the border to get a second teacher's pension in CT (both of which she paid into). She realized that SS wasn't in the cards for her (to any meaningful level) but lived with the system in place. Her husband had a middle-manager job at Megacorp after director-level jobs were cut away. So, he got a fixed pension and paid into SS.

Fast forward to their early 70's, when the Social Security Fairness Act came through and now the wife is eligible for half of the husband's FRA. Combined pensions and SS (without a drop of any other income) and they are already above the IRMAA threshold.

In Alabama, that isn't happening. But, then again, neither are they dealing with Northeast prices.

 

[CalBird]

Not worry about IRMAA yet. But I am consciously managing my income to avoid those TAX cliffs. So I am intentionally/unintentionally underspending, meaning not spending to the level of my portfolio capacity. Not sure if it’s a wise thing to do, at the end of the day if I don’t spend it someone else will.

 

[ShokWaveRider]

For us the key was having a large taxable bucket on retirement. So keeping below the IRMAA cliff has been manageable.

 

[CalBird]

I have about one-third of my portfolio in taxable which is sizable. Taxable helps to some extent. when I sell anything from taxable, more than two-third is capital gains which contribute to income. One option I am entertaining is using HELOC for any spending above the threshold I am targeting, but that is more of kicking the can down the road.

 

[MichaelB]

I would agree with you if one's income floor or wo$king income was at the level I described in the OP. But not IMHO when one is retired has a lower income floor and has to withdraw funds from their stash to make up their income level in a HCOL area. I consider us a typical middle class family slowly approaching Upper Middle Class but not there yet. But as the COL keeps going up, middle class incomes are changing. I personally feel that a lot of folks consider themselves middle class when in fact they are not, they are below the middle class threshold.

Here is some info I dug up from the Web. It is definitely different by State an COL of one's own location.

Middle-Class Income Range in 2026​

The middle-class income range in the United States varies significantly by state. This range is typically defined as being between two-thirds to double the median household income for each state. The upper bound is still fundamentally middle class for a HCOL location.

I think a middle class income is the middle 2 quartiles of median household income, regardless of where one lives. IRMAA is firmly in the top 10%-20%, so it’s up there.

I think many people in the top quartile have middle class values and see themselves as solid middle class residents, and in values they probably are. We don’t see many of the lower income seniors, but they’re out there. The median household income for seniors is $56k. The first rung for IRMAA is 4x that number. I don’t like to pay, but I’m happy I meet that threshold.

 

[TheWizard]

Not worry about IRMAA yet. But I am consciously managing my income to avoid those TAX cliffs...

To my knowledge, we don't have income tax cliffs here in the US similar to the way we have IRMAA tier cliffs.

We have tax brackets that increase to the extent that your income exceeds the previous bracket's upper limit. That's not a cliff.

Explain further if I misunderstood something...

 

[NW-Bound]

We have been paying 1.4x since we both turned 65, and had been limiting it up to $250k to avoid NIIT. But our tIRAs are still growing, so we blew past the $250k limit and started limiting investment income...

I might have heard of NIIT, but knew of the threshold the 1st time when doing my 2025 tax return. I had been paying IRMAA, but NIIT? The tax software said "Congrats, you are going to pay extra for NIIT". Hah!

Oh well. My revenge is to get more tax-free investment returns from my now 7-figure Roth. I am cool now.

 

[NW-Bound]

Maybe my luck will change, but here are some numbers from the larger Roth account of the 3 we have. My brokerage Web report has a summary page which I just found.

Realized gain in all of 2025: $161,654. Realized gain in 2026 YTD: $196,482.

I have not looked at the other 2 smaller Roth at another brokerage.

My point is that the tax laws penalize well-off people in some aspects, but cut us some slacks in other areas. We can make lemonade out of lemons, and it can be tasty.

 

[MichaelB]

My point is that the tax laws penalize well-off people in some aspects, but cut us some slacks in other areas. We can make lemonade out of lemons, and it can be tasty.

So true.

 

[anethum]

I think a middle class income is the middle 2 quartiles of median household income, regardless of where one lives. IRMAA is firmly in the top 10%-20%, so it’s up there.

I think many people in the top quartile have middle class values and see themselves as solid middle class residents, and in values they probably are. We don’t see many of the lower income seniors, but they’re out there. The median household income for seniors is $56k. The first rung for IRMAA is 4x that number. I don’t like to pay, but I’m happy I meet that threshold.

The first IRMAA tier for single filers is half that of joint filers, which makes a huge difference, esp. for Roth conversions. Also, I think that living in an HCOL area does indeed matter for living a middle class existence. My property tax in my HCOL area is double my income tax and is much more than the highest IRMAA tier would be for an entire year, and that's despite living in a small future teardown but which is in a desireable location.

To my knowledge, we don't have income tax cliffs here in the US similar to the way we have IRMAA tier cliffs.

We have tax brackets that increase to the extent that your income exceeds the previous bracket's upper limit. That's not a cliff.

Explain further if I misunderstood something...

It's true that the federal income tax brackets themselves don't have a cliff. But we have tax credit cliffs. When I was 64, if I had gone $1 over the 400% of poverty level cliff, I would have lost an $8,000+ ACA premium tax credit. Also, LTCG are taxed at different rates depending on your AGI, so that might arguably be a cliff. Also NIIT. And if my AGI (not MAGI) goes above $100,000 I will lose a $1,000 senior state income tax credit. I know that in some locales with a senior property tax credit, you don't get the credit if your AGI is above a certain amount. A friend of mine in one of those locales went $500 above the AGI threshhold one year and lost about a $3,000 senior property tax credit.

 

[MichaelB]

The first IRMAA tier for single filers is half that of joint filers, which makes a huge difference, esp. for Roth conversions. Also, I think that living in an HCOL area does indeed matter for living a middle class existence. My property tax in my HCOL area is double my income tax and is much more than the highest IRMAA tier would be for an entire year, and that's despite living in a small future teardown but which is in a desireable location.

Single being 1/2 of joint is unfair, it doesn’t reflect the reality of household finance.

 

[N02L84ER]

Our income exceeds our expenses. For the years before DH turned 65, we managed our income to not exceed 4 FPL. Until at least 2029, we will manage our income to not exceed $150K. Then we will probably manage our income to not exceed the top of the 12% bracket plus deductions, unless tax laws change significantly. We should not have to worry about IRMAA until one of us passes, unless tax laws change significantly.

 

[GravitySucks]

Plan is to have IRMAA being my income stop point till RMD might push me over.

95% of my money is in a tIRA. I’ll spend what I want then towards the end of the year I’ll subtract what I’ve spent from the IRMAA estimate and gift half to my kids and ROTH convert the other half.

I Lean Fired 13 years ago, only recently have things grown to the point that RMD will be a problem. As problems go, getting bumped into IRMAA tier 1 is a good one to have. Might use QCDs to offset.

Unusual spending can be covered from the smallish Roth.

 

[CalBird]

To my knowledge, we don't have income tax cliffs here in the US similar to the way we have IRMAA tier cliffs.

We have tax brackets that increase to the extent that your income exceeds the previous bracket's upper limit. That's not a cliff.

Explain further if I misunderstood something...

I was referring to ACA cliff. ACA subsidies are more or less of TAX, or TAX related when filling TAX return.

 

[Trailwalker]

We manage IRMA by having a large taxable bucket and modest spending. Then we do Roth conversions to the 12% bracket.