Here's How Your Social Security Claiming Age Could Accidentally Raise Your Medicare Costs

When you think about your retirement goals, living comfortably without having to constantly worry about money is probably one of them. And the right retirement income strategy could help you get to that place.

In retirement, it's optimal to have a mix of assets you can live on. That could be a combination of investments like dividend stocks and bonds, IRA or 401(k) savings you withdraw from, and Social Security benefits. In fact, you may end up retiring prior to claiming Social Security so that once those benefits start coming in, your income increases.

A larger income due to claiming Social Security is a good thing in theory, but it could spell trouble in the context of your Medicare costs.

How Social Security and Medicare enrollment work

The earliest age you can sign up for Social Security is 62. But if you file for benefits ahead of full retirement age (FRA), which is 67 for anyone born in 1960 or later, your monthly Social Security benefits will be reduced. For this reason, many seniors opt to wait until FRA arrives to file for benefits.

Medicare enrollment, meanwhile, begins at 65. What this means is that when seniors today are eligible for Medicare benefits, they're not yet eligible for their Social Security benefits without a reduction. So it's not uncommon to sign up for Medicare before filing for Social Security.

What Medicare costs enrollees

Most retirees do not pay a monthly premium for Medicare Part A, which covers hospital care. But Medicare Part B, which covers outpatient care and diagnostic services, charges a standard premium each month. That standard premium can change from one year to the next. This year, it's $202.90.

In addition to Parts A and B, Medicare enrollees need prescription drug coverage. For that, they can either buy a Medicare Advantage plan that includes prescription coverage or buy a Part D drug plan. Some Advantage and Part D plans do not charge premiums, but many do.

Unlike Part B, there's no standard monthly premium cost for Medicare Advantage plans or Part D plans. Some plans cost more than others but may offer different levels of coverage and benefits.

Why claiming Social Security could lead to higher Medicare premiums

Even though Medicare has a standard monthly premium that applies to Part B, some enrollees are forced to pay more in the form of income-related monthly adjustment amounts, or IRMAAs. IRMAAs are surcharges that apply to people with higher incomes. They can drive up the cost of Medicare Part B as well as Part D.

In 2026, seniors who are single with an income over $109,000 can face IRMAAs. The same applies to married couples filing jointly with an income over $218,000.

Here's where Social Security ties in. Let's say that you enroll in Medicare at 65 but file for Social Security two years later at your FRA. At that point, your Social Security benefits could raise your income to the point where you start to face IRMAAs, thereby leading to higher Medicare premiums.

How to avoid a financial shock

If you're used to paying a certain amount for Medicare and your premiums suddenly skyrocket because you're hit with IRMAAs, it can throw your financial plans off course. That's why it's important to understand the way your retirement income impacts your Medicare costs.

It's also important to realize that once Social Security starts, your income may be high enough to pay more for Medicare if your benefits are generous and you also have a decent amount of income from other sources.

That doesn't necessarily mean you're doomed to see your Medicare premiums increase substantially once your Social Security benefits begin, though. If you keep your retirement savings in a Roth IRA, your withdrawals won't count as taxable income. That means they won't be included in the formula that determines whether you face IRMAAs.

If your only retirement income streams are Roth IRA withdrawals and Social Security benefits, even if your monthly checks are large, you may be able to avoid IRMAAs. So choosing the right home for your savings is crucial.

Bottom line

Failing to account for the impact Social Security benefits have on your Medicare premiums is one of the biggest financial mistakes you might make. It's important to understand what goes into Medicare premium costs, and to recognize that the higher your retirement income is, the more you might have to pay.

Once you understand that, you can work with a financial advisor to keep your Medicare costs as low as possible. That could mean choosing your investments strategically or saving for retirement in a Roth account so your withdrawals don't drive up your taxable income.

All of these things must be planned carefully in advance, so don't wait for retirement to begin mapping out a financial strategy. Instead, meet with a professional ahead of retirement so you don't end up encountering financial surprises.

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