Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make small, smarter financial decisions. Reyna Retirement is all about breaking down complex financial concepts into language you can actually understand.
Now here's the co founder of American Federal Benefits Consultants, Reyna Reyes.
[00:00:40] Speaker B: Good morning and happy day to you. And we've all heard the song back in, I think it was the 80s or maybe 90s where it's like I want money, lots and lots of money. But the problem is if you have a lot of money and you earned a lot of money in any given year and you're going to take Medicare two years later, that I got a lot of money, income issue can come back and bite you because the amount of money you made two years ago is going to determine the amount you pay for Medicare Part B. So this year we had a certain threshold and a level for those. Next year it's going to change.
And I want to tell you what those thresholds are, what it looks like, how much. But here's the big question, Rayna, what can I do about this? Thanks for the information, but what can I do? Well, take inventory of who you are and where you are in your life. For example, if you're 60 years old, there's not a ton you can do today because it doesn't matter. Two years from now you're only going to be 62 and may not have Medicare unless there's a disability. Remember, Social Security disability approval will merit you Medicare two years after the approval from Social Security disability. So it might be something you want to be aware of. But here's the deal. If you're 63ish, 60, late 62, early 63, you are then two years away from Medicare and you have a lot that you can do this year to determine what you will or won't make. Now, you can't do anything about your salary, but you can determine how much you want to take out of things like tsp for 1k or either Roth conversions, because even next year for my federal employees, yay. TSP is offering an internal Roth conversion from traditional to Roth, but you get taxed on that when you do the conversion, which means it's extra income. So again, you cannot do anything about how much income you make today.
But you can decide whether or not you're going to grab extra cash from tsp. And if you are going to how much? Well, let's see what these thresholds are and what your options will be. So if you are just an individual this last year and you made $109,000 of income or less, then this year, 2026, this upcoming year you will pay the standard rate, which is $206 a month, 206, 50. No surcharge, no extra. Now, if you're married, you can make double that amount to 18.
So. Well, that's nice. It's a nice doubler. Good thing to remember, it's just double the amount. So if you're under that threshold between you and your honey bunches, then the both of you, if you're both eligible, will only pay the regular 206.
So if you're saying, yeah, Raina, but what does it have to do with me taking money out of tsb, well, that is where you can decide if you want to grab a big chunk. Because what if your income between the two of you was 190,000, well, then you've got that amount of window between 190 and 280 that you can go ahead and take out, what is it, $28,000 you could take out of TSP and still only pay the $206 a month. Now, obviously that's this year's next year's threshold from last year, and then the year after that, we'll have a different threshold for this year.
In comparison, last year's threshold for a joint income was 216 individuals, 106. So you see the trend. It's going to increase a little bit as time goes by. Again, why do we care? Because if you bust and then a couple of years later you have to pay more, you may be irritated yourself, but you won't know why it happened. If this year you can sort of look around and say, yeah, I have this much room, I was going to grab $50,000 from TSP, but because of this year's threshold, I really don't want to go over that amount, let's keep it under this threshold. That way we don't hurt ourselves two years later. Whether that's a withdrawal, Roth contribution or correction, Roth conversion, something like that. So these are the things you want to be aware of. Now again, there's a host of threshold, so maybe you can't help it and you're already making 150 grand or, you know, between the two of you, you're already at $300,000. Well, your next threshold, of course we 342. So if you're making $300,000 between you and your spouse, then you got $42,000 window where if you wanted to grab more, convert, whatever before you hit that next threshold and pay $536 a month for Part B.
Now remember, there's plans all over town that once you have Medicare Part B, we can have a talk that can potentially reduce the cost of Medicare Part B. And we should definitely talk about that. But this is a prevention talk. What do they say an ounce of prevention is worth a pound of cure. And I would much rather have a little bit of panning so we don't have to do a lot of correction because sometimes you can't do anything about the correction. You just got to sort of, you already made the bed, you got to lie in it. So this goal is to kind of start looking into the future at the end of the year. Why the end of the year? Because that's when you know exactly how much you've made. Come say October, November already this year. So you can decide, okay, am I going to grab more? If so, what are my thresholds? Threshold number one, tax brackets, threshold number two, irmaa, which is, that's what they call this, the income related monthly adjustment amount for Medicare recipients.
So if you're 63 or over and you're two years away or you're already within Medicare beneficiary eligibility, time to start thinking about it. And reach out if you need help, because that's what I'm here for.
I have myself and a few other Medicare specialists on my team. We can help you make sense of your options, the income levels, how to do off conversions and Medicare prep. We look forward to talking with you soon. We just want to do a little bit of planning so you can have a great outcome.
[00:06:47] Speaker A: Thanks for listening to Reyna Retirement. With a strong commitment to ethical standards, Reyna works hard to find the right solution for each individual or family who reaches out. For advice. To contact rena directly, call 850-450-6500. That's 850450 6500. Or to reach the team at American Federal Benefits Consultants, call 1-800-872-8857. That's 1-800-872- 8857. You can also go online to AmericanFederal.org not affiliated with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government agency or affiliated with the Federal Government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Financial, Federal Benefits Consultants, Agents, Consultants, or any independent contractors do not provide tax, legal, or investment advice and do not engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
