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

A couple with substantial pre-tax retirement savings and Medicare eligibility can reduce costs by coordinating Social Security claiming and 401(k) withdrawals. Claiming Social Security at 65 while leaving 401(k) balances to grow can increase modified adjusted gross income and trigger Medicare Part B and Part D surcharges. IRMAA uses a two-year lookback, so a high-income year such as a large RMD, an untargeted Roth conversion, or a pre-tax account withdrawal can cause surcharges to persist. Spending from 401(k) first for several years can keep MAGI below the IRMAA floor. Delaying Social Security to age 70 increases benefits through delayed credits while later withdrawals can be reduced to maintain MAGI below thresholds.

"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."

"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. 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."

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