Why High Earning Couples Are Spending Their 401(k)s Before Social Security to Avoid the IRMAA Cliff

A couple turning 65 with $2.5 million in traditional 401(k)s and Medicare cards in hand has two levers most retirees never coordinate: when to claim Social Security and when to drain pre-tax accounts. The instinct is to file at 65, leave the 401(k)s compounding, and protect principal. For high earners, that instinct often costs six figures in Medicare surcharges and lifetime taxes.

The smarter play runs the opposite direction. Spend the 401(k) first. Delay Social Security to 70. Use the gap years to clear a tax runway that protects the next two decades from the IRMAA cliff.

How the IRMAA Cliff Actually Works

Modified adjusted gross income above $218,000 MFJ in 2026 triggers Income Related Monthly Adjustment Amounts on Medicare Part B and Part D. The surcharges scale by tier. The first tier adds roughly $74 per month per spouse on Part B. The top tier hits about $487. Two spouses, both enrolled, both surcharged: the household pays the bill twice.

The lookback runs two years. MAGI on the 2026 return drives 2028 premiums. A single oversized RMD year, a Roth conversion done blind, or a 401(k) lump sum for a kitchen remodel can cascade into surcharges that linger long after the income event.

Drain Before You Claim

Take the same couple at 65. Combined Social Security at full retirement age is roughly $66,000. With delay credits of 8% per year applied from 67 to 70, that benefit grows to about $90,000.

For five years they live on the 401(k). They pull $80,000 a year, $400,000 total. The standard deduction and the 22% bracket absorb most of it. MAGI sits near $80,000, well under the $218,000 IRMAA floor. No Medicare surcharges. No Social Security taxation problem yet, because no benefits are flowing.

At 70 they flip the switch. The $90,000 Social Security check arrives. They take a reduced 401(k) draw of $40,000, and joint MAGI lands near $130,000, still under the IRMAA threshold even with 85% of Social Security taxable.

Compare with the alternative. Claim at 65, let the 401(k) compound, and by 73 the RMD on a swollen balance forces draws north of $110,000 on top of Social Security. MAGI clears $218,000. Both spouses pay the first IRMAA tier, some years the second. Over a 25 year retirement, the avoided surcharges and lower marginal brackets add up to between $80,000 and $150,000.

Why the Math Holds Up in 2026

The bridge years sit on a friendlier rate backdrop than 18 months ago. The Fed funds upper bound is at 3.75% after three cuts since September. The 10 year Treasury yields 4.47%, which means a short Treasury ladder funding the $80,000 annual draw is a credible alternative to selling equities into a down year. CPI sits at 332.4, running near 2.1%, which keeps Social Security COLAs intact and the IRMAA brackets indexed.

A 65 year old in average health has a median life expectancy past 85. The break even age on delaying Social Security from 67 to 70 lands near 80. The surviving spouse keeps the higher benefit for life, which is the underrated half of the strategy. Locking in a larger Social Security check at 70 buys longevity insurance no annuity matches dollar for dollar.

What To Do This Week

1. Pull both Social Security statements at ssa.gov and write down the benefit at 67 and at 70. The 8% delay credit between full retirement age and 70 is the highest guaranteed return either spouse will see on a financial decision this decade.
2. Calculate the 401(k) draw that keeps joint MAGI under $218,000, including taxable interest, dividends, and any part time wages. The 2026 IRMAA fact sheet on cms.gov lists every tier and the exact surcharge per spouse.
3. If a Roth conversion is on the table, model it inside the bridge window, before benefits start. Filling the 22% and 24% brackets between 65 and 70 keeps the conversion out of the IRMAA two year lookback once Social Security begins at 70.

One exception is worth naming. A couple in poor health, with family history pointing to a shorter horizon, should claim early and protect cash flow today. The bridge strategy rewards longevity. For everyone else holding $2 million plus in pre-tax accounts at 65, draining before claiming is the move the math keeps pointing toward.