A Retiree’s Guide to Maximizing Social Security and Medicare Together
Written by
Chris Adam
Edited by
Zuri Anderson
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If you’re a retiree or thinking about life down the road, you may be considering Social Security and Medicare as two separate systems that will impact your finances.
“That’s a costly mistake,” said Andrew Lokenauth, from Fluent in Finance. “Your Social Security claiming decision directly impacts your Medicare costs through IRMAA, or Income-Related Monthly Adjustment Amount. During my time on Wall Street, I watched high-earning professionals get blindsided by this connection.”
Here are five strategies to help you maximize Social Security and Medicare together.
1. Claim Social Security Early If You Have High Healthcare Costs
“I know this contradicts traditional advice about delaying until 70,” Lokenauth said. “But if you’re spending $800 or more monthly on prescriptions or dealing with chronic conditions, getting Medicare at 65 and keeping your income lower makes sense. Your reduced IRMAA surcharges can offset the smaller Social Security check.”
2. Use the Social Security Earnings Test Strategically
If you claim before your full retirement age and keep working, Social Security withholds $1 for every $2 you earn above $23,400 (2024 limit), Lokenauth noted. But here’s the secret, he added, they recalculate your benefit at full retirement age to account for those withheld months. You’re not losing money, you’re delaying it.
“This matters for Medicare because working longer means employer health coverage, which delays Medicare enrollment and potential IRMAA surcharges,” Lokenauth said. “You’re essentially using the earnings test as a forced delay mechanism.”
3. Coordinate Your Retirement Account Withdrawals With Your Social Security Start Date
“This is where I’ve seen the biggest planning failures in my two decades in finance,” according to Lokenauth. “People claim Social Security at 62, then continue taking large IRA distributions because they don’t need the Social Security money yet. Their combined income triggers massive IRMAA surcharges.”
Instead, he advised, take larger IRA distributions between 62 and 65 before Medicare starts. Use those funds to delay Social Security and keep your income lower once IRMAA calculations begin. You’re front-loading your tax bill to save on healthcare premiums later.
4. Appeal Your IRMAA Determination If You Have a Life-Changing Event
“Medicare allows you to request a reduction if you experienced a drop in income due to retirement, divorce or loss of a spouse,” Lokenauth said. “Most people don’t know this exists. I’ve helped clients save $3,000 or more annually through successful appeals.”
5. Consider a Roth Conversion Strategy Before Claiming Social Security
“Roth IRA distributions don’t count as income for IRMAA calculations,” Lokenauth said. “If you convert traditional IRA money to Roth between ages 60 [and] 65, you’ll pay taxes on the conversion. But once you’re on Medicare and taking Social Security, those Roth withdrawals won’t increase your premiums.”
Lokenauth noted that this requires upfront tax pain for long-term healthcare savings. The break-even is usually five to seven years, depending on your tax bracket and healthcare costs. But for someone expecting to live into their 80s or 90s, the math works beautifully, he said.
“I always tell my clients that even if you keep your money and investments separate from your spouse or partner, it is important to take a more coordinated approach with Social Security and Medicare,” according to Marguerita Cheng, certified financial planner (CFP), CEO of Blue Ocean Global Wealth. “It’s always good to consider consulting with a professional because Medicare and Social Security can be overwhelming.”
Since retirees returning to the workforce is a growing trend, Marcus Sturdivant Sr., managing member of The ABC Squared, said to keep that income amount in mind when figuring out tax implications and Medicare costs.
“Leveraging the amounts and levels of premiums we pay is a game-changer,” he said. “Healthcare costs continue to rise, and as you retire, you have the multiplier effect of healthcare becoming a larger part of your life expenses.”
Per Taylor Kovar, CFP, co-founder of BudgetGPT, “I’ve seen situations where timing Social Security, managing income and being mindful of healthcare costs helped smooth out cash flow and reduced surprise expenses down the road. When those decisions are coordinated, retirees usually have an easier time budgeting and adjusting as costs change over time.”
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