Is Retirement A Life-Changing Event For IRMAA?

Retirement often brings a welcome shift—more time, fewer obligations, and the freedom to focus on what matters most. But while your day-to-day schedule may change, some parts of your financial life don’t slow down quite so easily.  

For many retirees, the income-related monthly adjustment amount (IRMAA) can come as a surprise. It’s an extra cost added on top of standard Medicare premiums, and it’s triggered not by your current income, but by what you earned two years ago. If you’re no longer working, that can feel like an unfair mismatch. That’s why it’s so important to understand how your past income, current status, and official documentation all factor into what you’re being asked to pay.

Is Retirement a Life-Changing Event for IRMAA?

The Social Security Administration (SSA) allows you to request relief from IRMAA if your income drops due to what it considers a “life-changing event.” These events must be specific, long-term, and documented. Retirement is one of the few events that qualify automatically under SSA guidelines.1

But if retirement counts, why are so many people still hit with higher premiums after they stop working?

The key is this: retirement qualifies you to ask for an IRMAA adjustment, but it doesn’t lower your costs automatically. Unless you file the proper paperwork, your premiums are still based on past income, and that past income might not reflect your new financial reality.

This is especially important given the two-year lookback rule. Even if your income drops in the current year, your premiums might remain high until the system catches up—or until you submit a formal request to reduce them.

What Is IRMAA and Who Does It Affect?

IRMAA adds a surcharge to your Medicare premiums if your income crosses certain thresholds. It isn’t part of the base Medicare cost—it’s an extra fee tied directly to your income level from two years prior. Here’s what you need to know:

Definition of IRMAA: IRMAA stands for income-related monthly adjustment amount. If your income exceeds set brackets, your Medicare costs will increase. These brackets are reviewed and updated each year.

Who is affected: This adjustment applies to individuals and couples whose modified adjusted gross income (MAGI) exceeds Medicare’s annual limits. Even retirees can be impacted if they withdraw from large accounts or trigger high one-time income events.

Connection to Medicare Parts B and D: IRMAA specifically applies to Medicare Part B (doctor and outpatient services) and Part D (prescription drugs). These parts usually have standard premiums, but IRMAA adds a layer on top for higher earners.

Use of MAGI and income brackets: Medicare doesn’t look at just your taxable income. It uses adjusted gross income (MAGI). The higher your MAGI, the more you’ll pay.

How IRMAA Is Calculated

Your IRMAA costs are tied directly to how much income you reported two years ago. More specifically, Medicare uses your modified adjusted gross income (MAGI) from your most recent available tax returns, as provided by the IRS.

What counts towards your MAGI again?

It’s more than just your paycheck. MAGI includes income from Social Security, pensions, required minimum distributions (RMDs), dividends, interest, rental income, and capital gains. If you’ve recently sold investments or pulled money from a retirement account, that can bump up your total and trigger IRMAA, even if you’re no longer working.

Once your tax return is processed, the IRS forwards that data to the Social Security Administration (SSA). Then, the SSA calculates your IRMAA and adds it to your standard Medicare premiums. This process typically happens automatically, which is why retirees often find themselves surprised by an unexpected cost spike.

Can you do anything to prevent that spike—or reverse it?

If your current income is much lower than it was two years ago, you may be able to request an adjustment. But that means filing specific paperwork and having the proper documentation to back you up.

Please Note: For 2025, if your modified adjusted gross income (MAGI) is above $106,000 (single) or $212,000 (married filing jointly), you may pay more for Medicare Part B and Part D due to IRMAA (Income-Related Monthly Adjustment Amount). These income thresholds affect both premiums, and higher brackets can raise monthly costs by hundreds of dollars.2

What Other Life-Changing Events Can Qualify for IRMAA Relief?

The SSA allows several types of major life shifts to qualify for IRMAA relief, not just retirement. If your income dropped due to one of these other events, you may be eligible for lower Medicare costs:3

Marriage: If you recently got married, your household income may now be counted jointly. Depending on how your new modified adjusted gross income (MAGI) compares to IRMAA thresholds, your premiums could go up or down.

Divorce: A divorce situation often leads to changes in financial structure and tax filing status. If you’re now reporting as a single filer and your income has dropped, that shift could qualify you for relief.

Death of a Spouse: The death of a spouse can dramatically reduce household income. If you’re now the sole income earner and your MAGI has dropped as a result, you may be able to request an IRMAA reduction based on this event.

Loss of Pension or Income-Producing Property: If you no longer receive income from a pension or have sold or lost an income-producing property, that’s considered a permanent loss of income. The SSA recognizes this as a valid reason to lower your IRMAA.

Employer Settlement Payout: A large employer settlement payment—especially if tied to an involuntary separation from your job—may inflate your past MAGI. However, the SSA allows you to report this one-time event and request that IRMAA be recalculated to reflect your lower ongoing income.

Please Note: Each of these events can trigger a major change in your financial life—but only if you notify the SSA.

How to Request an IRMAA Adjustment After Retirement

If your retirement has led to a lower income, the next step is to request an IRMAA adjustment directly with the Social Security Administration (SSA). To do that, you’ll need to file what’s called a life-changing event form—officially known as Form SSA-44.

When should you file the form?

It’s best to file as soon as your income drops—ideally before your IRMAA surcharges appear on your Medicare bill. On Form SSA-44, check “work stoppage” as your qualifying life-changing event and provide estimates for your current and upcoming year’s modified adjusted gross income (MAGI).

You’ll also need to submit documentation to support your claim. This might include a retirement letter, final pay stub, or pension benefit statement—anything that helps show the timing and scale of your income reduction.

What happens after you submit the request?

If the SSA approves your request, your IRMAA may be lowered or removed for upcoming premium bills, and in some cases, applied retroactively. You’ll receive a determination letter outlining your updated monthly premiums. If your income changes again due to another qualifying event, you can file a new Form SSA-44 to update your IRMAA.

Planning Ahead: Reducing IRMAA Before and After Retirement

IRMAA isn’t just something to react to, rather, it’s something you can plan around. A few smart moves, both before and after you retire, can help reduce the chances of being placed in a higher bracket. Here’s how:

Defer or accelerate income intentionally: If you know you’ll be retiring in a given year, you can shift income to earlier or later tax years to avoid a spike in MAGI. For example, delaying a bonus or accelerating charitable giving may keep you below IRMAA thresholds.

Roth conversions: Converting traditional retirement accounts to Roth IRAs can help lower your taxable income in the future. While this may temporarily raise your MAGI now, it can reduce IRMAA charges in later years, especially during retirement.

Required Minimum Distributions (RMDs): Once you hit the RMD age, withdrawals from tax-deferred accounts can inflate your income. Planning for these in advance, or using Roth accounts to cover expenses instead, can help manage your Medicare costs.

Capital gains and dividends: Even passive income like stock gains or mutual fund distributions count toward MAGI. If you’re harvesting gains or receiving significant dividends, they could nudge you into IRMAA territory. Consider spacing out asset sales over multiple tax years, using tax-loss harvesting to offset gains, or shifting some holdings to tax-efficient funds to manage your income exposure better.

Married filing jointly considerations: Couples who file jointly benefit from higher MAGI thresholds, but the planning still matters. Coordinating income strategies between spouses can help keep you in a more favorable bracket.

Business or property income in retirement: If you’ve kept a rental home or small business for post-retirement income, it might add more to your MAGI than expected. Don’t let steady revenue from an income-producing property or passion project derail your Medicare planning.

IRMAA Mistakes to Avoid in Retirement

Even with the best intentions, small missteps can lead to higher Medicare costs or missed opportunities for relief. Understanding common mistakes can help you avoid headaches—and unexpected charges—down the line:

Expecting automatic adjustments: Retiring doesn’t automatically lower your IRMAA. Even if your income drops, the SSA won’t know unless you tell them. You must submit documentation through the proper process to reflect your new financial situation.

Filing the wrong form or missing documentation: Submitting the wrong paperwork—or not including the correct proof—can delay or even deny your request. Double-check that you’re using Form SSA-44, and include items like employer separation letters or final pay stubs to support your case.

Large, unplanned income events: One-time windfalls like selling a vacation home, cashing out a retirement account, or receiving a lump-sum pension can push your MAGI into a higher tier. These events don’t always qualify for IRMAA relief, so it’s wise to think ahead and spread income across multiple years when possible.

Confusing one-time events with permanent changes: The SSA only approves IRMAA relief for lasting shifts in income. If your income dipped temporarily (let’s say, you took a sabbatical or paused consulting work), that may not qualify. Relief is generally limited to events that permanently affect your ability to pay for Medicare.

IRMAA and Social Security Timing: What to Consider

How and when you start Social Security can affect more than just your monthly benefits—it can also influence the Medicare premiums you’ll pay, especially if IRMAA applies. Since both Social Security and IRMAA rely on your income history, the timing of each can have a ripple effect across your retirement finances. When dealing with both Social Security and IRMAA, make sure you think through the following:

Claiming early vs. delaying: If you begin Social Security benefits at age 62, you’ll start Medicare at 65 and may face IRMAA based on income earned when you were still working. On the other hand, delaying benefits may help you avoid IRMAA if your income drops significantly in retirement. However, Medicare enrollment at age 65 is still required unless you have creditable coverage through an employer plan.

Timing your enrollment with income shifts: Planning ahead for when you enroll in Medicare—especially if you’re near retirement—can help you avoid IRMAA surprises. If your MAGI from two years ago was high, but you expect a lower income now, you might consider coordinating an IRMAA adjustment request with your Medicare enrollment.

How SSA coordinates your records: The SSA uses your tax return data to set IRMAA and calculate whether you’re subject to premium surcharges for Parts B and D. If you’re starting both Medicare and Social Security around the same time, be sure your records are accurate and updated. A mismatch could delay your benefits or lead to incorrect charges.

IRMAA and Retirement FAQs

1. Can I appeal IRMAA multiple times if my income changes again?

Yes, you can. If you experience more than one qualifying event, or if your income continues to decrease over time, you’re allowed to file another life-changing event form with updated documentation. 

Each appeal must be tied to a new event or a further drop in income. For example, if you retire and later lose a secondary income stream, that second event could support a new appeal.

2. Do I need to reapply for IRMAA relief every year?

Not necessarily. If your income stays low and your appeal is approved, the new lower IRMAA may remain in place. However, IRMAA is re-evaluated each year based on your most recent tax return.

If updated IRS data shows a higher MAGI, IRMAA may be reapplied automatically. In that case, you’d need to submit a new appeal if your current circumstances still justify relief.

3. What if I only partially retire—do I still qualify for relief?

Possibly. If your partial retirement results in a meaningful, long-term income reduction, the SSA may consider it a valid life-changing event. The key is showing that the income drop is both significant and ongoing—not temporary or seasonal—and supported with appropriate documentation.

4. Can capital gains or selling property after retirement trigger IRMAA?

Yes. Selling stocks, mutual funds, or real estate can create a large bump in MAGI for the year, even if it’s a one-time event. That spike can lead to an IRMAA surcharge two years later. If the gain came from selling an income-producing property and that income stream has ended, you may be eligible to appeal, depending on the situation.

5. Will my spouse’s retirement affect my IRMAA?

It might. If you file taxes jointly, your household MAGI determines your IRMAA bracket. A spouse’s retirement could lower your combined income and potentially bring you below the IRMAA threshold. This is especially relevant if one partner retires much earlier than the other, causing a shift in overall income levels.

6. How long does it take for an IRMAA appeal to be processed?

It varies, but the process can take up to 90 days.4 After submitting Form SSA-44 with the necessary documentation, the SSA will send a confirmation and follow up with a notice of their decision. If approved, any adjustment is typically reflected in your Medicare billing shortly after the determination is made.

We Can Help You Handle Retirement and IRMAA

Even after the workday ends for good, some financial responsibilities keep showing up, like Medicare surcharges that may or may not match your current income. IRMAA can continue to affect retirees well into their post-career years, especially if the income from your past is still casting a long shadow over your present.

The good news? Retirement is officially recognized as a qualifying life-changing event. That means you don’t have to carry higher Medicare costs indefinitely—but only if you take action.

Professional planning can make a real difference here. With the right strategy, you can manage your income-related monthly adjustment, reduce your future Medicare premiums, and plan out your withdrawals and income timing to reflect your actual needs—not just what your old paycheck says.

If you’re unsure where to start, we’re here to help. Whether you’re nearing retirement or already adjusting to life after work, we invite you to schedule an introductory call with our team. We can discuss how to shape a retirement that fits your lifestyle and budget, with fewer surprises along the way.

Resources:

1. https://www.kiplinger.com/retirement/medicare/602937/you-can-appeal-a-medicare-premium-surcharge
2. https://www.humana.com/medicare/medicare-resources/irmaa
3. https://www.ssa.gov/forms/ssa-44.pdf?utm
4. https://boomerbenefits.com/everything-you-need-to-know-about-irmaa/