55% of Working Boomers Expect to Retire at 70 or Later. At 66, Her Higher-Paying Job Could Add $1,736 to Her Medicare Premiums

More than half of working baby boomers expect to retire at 70 or older, if they retire at all, according to a Transamerica Center for Retirement Studies report released October 28. For older Americans trying to strengthen their finances, staying employed can help protect retirement savings. But a bigger paycheck can also increase Medicare premiums, with the added cost appearing two years later.

Consider Carol, a hypothetical 66-year-old who took a job paying $125,000 a year in 2026. She also plans to withdraw $15,000 from her traditional IRA to replace her roof. Together, those decisions could push her into a higher Medicare income bracket in 2028, potentially adding $1,736 to her annual premiums based on current thresholds.

Your Income Today Sets Your Premium Two Years From Now

The Social Security Administration calculates the surcharge, called IRMAA (Income-Related Monthly Adjustment Amount), from the most recent federal tax return the IRS provides. That is usually the return from two years earlier, so what you earn in 2026 sets your 2028 premiums.

SSA measures income using modified adjusted gross income (MAGI), which it defines as total adjusted gross income and tax-exempt interest income. Wages count. So do withdrawals from a traditional IRA or 401(k). Interest from municipal bonds counts too, even though it feels tax-free.

You can pay IRMAA twice. SSA adds one surcharge to Part B and another to Part D, and each applies only on the benefit you have. Here are the 2026 monthly surcharges for single filers:

A $15,000 IRA Withdrawal Bumps Carol Up a Tier

Carol’s 2026 MAGI comes to $140,000. Because the 2028 brackets aren’t out yet, we use the 2026 table as a stand-in. The brackets rise with inflation: the first single-filer threshold went from $106,000 in 2025 to $109,000 in 2026. So the real 2028 lines will probably be a bit higher.

Using the 2026 thresholds, Carol’s $140,000 income puts her $3,000 above the $137,000 cutoff for the next IRMAA bracket. That would mean combined Part B and Part D surcharges of $240.40 a month, or $2,884.80 annually, on top of her regular premiums.

Without the IRA withdrawal, her $125,000 salary would place her in the first bracket, with combined surcharges of $95.70 a month, or $1,148.40 a year. The difference comes to $1,736.40 annually, although the actual impact on her 2028 premiums will depend on thresholds and surcharges that haven’t been announced. Retirees get caught off guard by IRMAA and other Medicare costs tied to income, and we mapped out the full set in a free Medicare guide. At 66, Carol has no required minimum distribution (RMD) to take, so the withdrawal is her choice and she can move it.

Using the 2026 thresholds, Carol could avoid the higher bracket by cutting her IRA withdrawal by $3,000 or shifting part of it into 2027. That would keep her 2026 income at or below $137,000. The actual savings depend on where Medicare sets its 2028 thresholds, but spreading withdrawals across tax years could help her manage future premium costs.

Retiring Could Give Her a Way to Lower Her Medicare Surcharge

Say Carol retires in 2027. Her 2028 premiums would still be based on her 2026 return. Form SSA-44 lets her ask SSA for a new decision based on a more recent year’s tax return information or information that is more accurate. Events that qualify include work stoppage (you stop working) and work reduction (you cut your hours). So do marriage, divorce, a spouse’s death, losing income-producing property, losing employer pension income and getting an employer payment.

Social Security also allows people to report anticipated income declines tied to qualifying life changes, including retirement or reduced working hours. Carol would need to provide information supporting the change and her expected income. Her voluntary IRA withdrawal, however, doesn’t qualify on its own, even if it pushes her into a higher premium bracket.

Three Moves to Make Before December 31

1. Estimate your 2026 MAGI now. Add up wages, IRA withdrawals, capital gains and tax-exempt bond interest. If you’re close to a bracket line, use the last two months of the year to move withdrawals and asset sales you can control.
2. Plan Social Security around your paycheck. At 66, Carol is still below her full retirement age of 67. If she claims benefits while earning $125,000, Social Security’s earnings test could cause substantial benefit withholding. The 2026 earnings limit is $24,480 for someone who remains below full retirement age all year. Any benefits she receives could also increase her taxable income and affect future Medicare premiums.
3. Review your eligibility for IRMAA relief when you retire. If you stop working or reduce your hours and expect your income to fall, ask Social Security whether you qualify for a new premium determination. Form SSA-44 allows you to submit documentation of the change along with actual or estimated income figures. If you’re still covered through a current employer and haven’t enrolled in Part B, check whether delaying enrollment makes sense.

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