Most people understand that taxes matter in retirement. What a lot of folks don't realize is that a tax decision you make today can affect something that seems completely unrelated later on: what you pay for Medicare.
That connection is one of the reasons I tell clients retirement planning is a lot more complicated than simply deciding how much to withdraw from your investments each month.
Your Income Can Affect Your Medicare Premium
Most Medicare beneficiaries pay the standard monthly premium for Part B. In 2026, that's $202.90 a month.
But higher-income retirees may pay more through something called IRMAA, the Income-Related Monthly Adjustment Amount.
For 2026, IRMAA kicks in once Modified Adjusted Gross Income exceeds $109,000 for an individual or $218,000 for a married couple filing jointly.
Here's the part that catches people off guard: Medicare generally looks back two years when determining whether IRMAA applies. That means a financial decision you make today could affect your Medicare premiums two years from now.
A Scenario I See Often
Picture a recently retired couple. They've got money spread across a few places, traditional IRAs and 401(k)s, Roth accounts, a taxable investment account, cash in the bank, and Social Security.
They decide they need an extra $60,000 for a major purchase. They certainly have the money. But where that $60,000 comes from matters.
Taking it from a traditional IRA could increase taxable income. Selling investments could create capital gains. Using cash may have little immediate tax impact. A Roth distribution, assuming it qualifies as tax-free, could look very different from any of those.
The question was never simply "do we have $60,000?" The better question is: what's the most appropriate way to produce $60,000 given everything else going on in our financial life?
Retirement Planning Is Really About How Things Connect
This is where retirement planning gets deceptively complicated. One decision can ripple into several others.
An IRA withdrawal can affect taxable income. Taxable income can affect how much of your Social Security gets taxed. Income can affect Medicare premiums. Investment sales can create capital gains. And eventually, Required Minimum Distributions reduce how much control you have over when taxable retirement money comes out at all.
None of these decisions is necessarily a problem on its own. The problem is making them in isolation, one at a time, without seeing how they connect.
The Years Before RMDs Can Be Especially Valuable
For a lot of my clients, there's a genuinely useful planning window between retirement and when RMDs begin. Income may temporarily run lower during those years.
That window can create room to evaluate strategies like Roth conversions, realizing capital gains, repositioning investments, or intentionally pulling some money out of tax-deferred accounts.
But the goal shouldn't automatically be paying the least tax possible this year. Sometimes paying a bit of tax today can potentially reduce taxes, or other costs, later on. Other times, accelerating income creates consequences that make the whole idea less attractive. That's why I never treat retirement tax planning as finding one magic number. It's about understanding how the rules interact with each other.
Don't Just Ask "How Much Can I Withdraw?"
Instead, I'd rather sit down with a client and ask: which account should this money come from? What will that withdrawal do to our taxes? Could it affect our Medicare premiums? How does it change future RMDs? And what does it mean for the surviving spouse someday?
Those are very different questions, and answering them well means looking well beyond a single investment account to the entire financial picture.
At FFWM, that's how I believe retirement planning should work. Your investments, taxes, income, Social Security, Medicare, and estate strategy don't exist independently of each other. They're all parts of the same plan.
Because when it comes to retirement, to play the game, you've got to know the rules.
If you'd like to talk through how a withdrawal decision might ripple through your own plan, that's exactly the kind of conversation I'd welcome having with you.