If a couple is pulling in $320+k (MJ) per year in retirement, I’m guessing that they don’t care much about IRMAA.
MM (and other penny pinch blog gurus like Samurai) makes a pretty penny by peddling his advice. So I would take his recommendations with a grain of salt. 
I’ve been following this thread for some time, but haven’t posted because H and I clearly do not have the same level of income as many of you. However, I disagree that very few people on CC would pay the minimum part B premium. For this year, the top Part B premium is $460.50/mo, so a couple would pay maximum $11,052/yr, and that’s for couples earning at least $750k in retirement. To not pay the minimum, the income would have to be in excess of $170k. We will be considerably under that when H retires in a couple of months, but with my small pension and SS, and H’s generous (in my opinion) state pension and SS in a couple of years, and some investments, we will be just fine.
Unless it’s just a few pennies, nobody wants to pay extra.
Not familiar with the blogs mentioned…Samurai and Mr Moustache…enlighten me/us please.
We had a weather day with cancellations, so the ‘State of the Markets’ (presentation to group) by financial advisers is rescheduled for later this month, and our appt with financial adviser is mid-March. Still fine tuning. 32 months to retirement and counting.
Sold a Florida lot I inherited (fairly low cost property) - first had financed it to a gal, and she found a way to have the loan paid off by a title company. Glad to have it sold! Tax free infusion (a little over $8K check from title company). She was making payments on a 60 month schedule, with only 1.5 years into it. She was financially strapped, so I was fortunate she found a way to have me paid off. I had to pay $2660 closing costs when she bought the property from me, and sure didn’t want to have to list the property again. She was highly motivated not to lose sunk costs.
Good thoughts to those making the transition to retirement now or already. Exciting to having a set date and a good plan in place.
Yeah; I figure it’s easy to “retire” early if your blog pulls in $400k in 2016, probably more now.
MMM claims they never spend blog money and actually lived on their $25K a year budget. My problem with him is the sanctimonious way he serves up much of his message, like his attitude about cars and biking, and some of his opinions are dangerously stupid IMO, like insurance - he has no homeowners insurance, no liability insurance, only has health insurance because he is required by law and complains about the cost since he makes too much money now to get a tax-payer subsidy, pays only $400/year for car insurance which pretty much has to be minimal coverage, etc.
Samurai, I feel, is up front about spending money his blog makes, and I think his budgeting and spending is far more realistic.
All of these guys are basically recipients of the huge run-up in the stock market over the last 15-20 years, and/or the huge increase in RE prices in certain markets in the last 10-15 years. If you are going to pursue FIRE, you need to be very careful about your assumptions.
And these guys also had the benefit of working in high paying occupations which enabled them to fund their portfolios. It’s a heck of a lot more difficult when you make $50K/year or less.
Someone who has reached the plutocrat level of wealth (such that houses, medical bills, and cars are pocket change, lawyers are on retainer, etc.) may not need any insurance. But everyone else needs to consider insurance to cover risks that would be unaffordable to self-pay.
For the person or household with $50k per year income, frugal living may be required to live within one’s means and avoid going into debt.
It is easy to live off crumbs when you know there is a whole cake that can be dipped into at any time later.
Not according to MMM. Just ride your bike everywhere! You’ll be so healthy you’ll never need a doctor.
Yes, but it is nearly impossible to achieve the asset levels needed for FIRE at this income level, and the FIRE proponents gloss over this. Samurai is an example of this - he retired at 34 with 80K in passive investment streams. If you make $50K - no way. A decade plus in investment banking? No problem!
I’ve been part of the MMM forums for many years, and while I do have some complaints against the guy, I will say that I loved the way his blog opened my mind to possibilities I hadn’t considered before. We’re not a family who can go with the most basic health insurance or ride our bikes everywhere, but after reading his blog for several months I did find myself shopping differently/more thoughtfully. I take what I can use and leave the rest for others, but overall really enjoy MMM, especially the forum.
H looks at gross and I look at net.
I don’t care how wonderful our gross income looks–will it cover the bills?
And who named it Gross in the first place. :))
Thinking this is because I actually pay the bills with the net while he can daydream about the gross number.
Mr. and (formerly) Mrs. MM decided that $800K was the nut they need to walk away from their cubicles and retire, and they worked their plan until they met that goal and haven’t revised it. Pete was already retired and his blog went for quite a while before he decided to evaluate and accept some carefully considered sponsorships. He’s very transparent about it all, and there are several articles on his blog about exactly how he decided to let the site make money and what he does with the income. He donates almost all of it. But, yes, he was a software engineer with a good salary and that enabled him and his wife (a realtor at the time) to accumulate the stash easier and more quickly than most. He’s transparent about that, too, and you can read the whole journey there if you’re interested. He does pontificate but, like @Glitterbug,we generally enjoy Mr. MM. I don’t think you have to buy in to his entire philosophy or adapt his lifestyle to make good progress toward a very sound if not early retirement. If he doesn’t float your boat, there are many other helpful voices out there to consider.
It’s not that much if you are converting tIRA to Roth. Total tax cost of conversion would increase by about $10,000. Does Medicare include SS benefits in determining total income?
Which is a good reason why you should not do a conversion which will put you over the cap, unless future marginal rates will be higher than today. I plan on doing conversions up to the IRMAA limit.
Good for you if you can do that. it is not unusual people to have $1M or more in their retirement account. To stay below IRMAA, $170K for MJ, it would take quite a few years to complete the conversion. Depending on when you start the conversion, there’s a good chance you’d be 70 1/2 years old and forced to take RMD from not yet converted balance.
Which is why I am not doing that much of a conversion and leaving the RMD’s for 70.5, at normal tax rates. Why pay a bunch of taxes today, at higher marginal rates, just so you can pay zero tax later. Much better to smooth them all out so you pay less taxes in total.
Look at IRMAA as just another tax, and if converting another $10k puts one over the IRMAA threshold, then the marginal tax rate for that last $10k is very expensive (your current marginal rate+IRMAA).
The standard ROT is just to do enough conversions to use up low tax brackets AND stay under the IRMAA threshold.
A $1M IRA balance means a RMD of ~$37k in year 1 (12% tax bracket).
A $3M IRA balance means a RMD of ~$111k, well under the IRMAA limit, and a 22% marginal tax bracket (MJ).
(Technically, the best way is to run a tax forecaster and estimate your marginal tax rates at age 70+ with and without RMD’s from conversions and compare that to the marginal taxes paid today, and then discount those future dollars back.)
Of course if your RMD is on top of pensions and Social Security IRMAA could be triggered easily. And if one spouse died and the second spouse is taking RMDs from both IRAs, tax brackets and IRMAA can increase.
If only we knew exactly how long we would live this would all be so much easier to plan.
interesting articles on SS claiming strategy, particularly in comparison with an annuity.
https://retirementresearcher.com/social-security-the-best-annuity-money-can-buy/
https://retirementresearcher.com/social-security-as-an-investment/
Good articles.