Key Takeaways
- A single 62-year-old Your Money, Your Wealth listener earning $250,000 plans to sell a second-home condo for about $400,000 of profit and retire at 64.
- His salary alone puts his 2027 tax return past $205,000, and Medicare will use that return for his first premiums, so he’s on track for a $446.30 monthly Part B surcharge at this year’s rates.
- A 2027 condo sale would push that surcharge to $487.00 a month, adding $40.70 a month to what his salary already costs him.
- When he stops working, form SSA-44 lets him ask Social Security to use a newer, lower year’s income, which would leave out both the salary and the sale.
If you’re a few years from Medicare and still earning a big salary, here’s something worth knowing: Medicare sets your Part B premium from your tax return two years back. So it can charge you at 65 for what you earned at 63, plus any big gain you took that year.
That’s a problem for one 62-year-old listener of Your Money, Your Wealth. Fortunately, there’s a form built for exactly his situation.
A big salary and a $400,000 condo gain
He wrote in to the show for its Nov. 10 episode. He’s single, still working and said, “I make $250,000 a year.” He plans “to retire at 64,” keep his main home for a long time and build a $1.5 million home.
He also wrote, “I plan to sell my second home condo for approximately $400,000 profit after tax and fees.” The IRS’s home-sale exclusion covers up to $250,000 of a single filer’s gain, but only on a main home, so none of the condo’s gain gets it. All of it goes on his tax return for the year he sells.
6 safe dividend stocks paying retirees 6%+ yields
There are over 100 stocks paying 6%+ annual dividends today.
But after an extensive investment review leveraging TIKR’s proprietary data, we now believe only six of them are truly safe for retirees.
They’re all yours for free as part of our new investment report, which you can access right here.
He’s paying the surcharge either way
Medicare charges the Part B surcharge in income bands, based on the return from two years before. This year a single filer pays an extra $81.20 a month above $109,000 of modified adjusted gross income. That climbs in steps to $446.30 above $205,000 and $487.00 at $500,000 or more. Part D drug coverage has its own income surcharge, set the same way.
He turns 65 in 2029, so Medicare will set his first premiums from his 2027 return. His $250,000 salary alone puts that return past $205,000. That means he’s headed for the $446.30 surcharge whether he sells the condo or not, which is $5,355.60 a year at this year’s rates.
Selling in 2027 would add to that. His salary plus the $400,000 gain puts that return at about $650,000, past the $500,000 line, where the surcharge is $487.00 a month. So the sale itself adds $40.70 a month, or $488.40 a year, at this year’s rates.
He can ask Social Security to use a newer year
When he stops working at 64, he can file form SSA-44 and ask Social Security for a new decision. Stopping work is one of eight life-changing events that qualify. Others include the death of a spouse, divorce and the loss of employer pension income. After one of those events, he can ask Social Security to set his surcharge from a newer, lower year’s income instead of 2027’s.
That newer year’s income wouldn’t include his $250,000 salary or a 2027 condo sale. Anywhere under $500,000, the $487.00 surcharge is gone. And at $109,000 or less, he’d owe no Part B surcharge at all, which saves him the full $487.00 a month, or $5,844 a year.
That newer year’s income really does have to come in lower, though. Withdrawals from a traditional 401(k) count, and so does any other income. He also told the show that with the new mortgage, “I will need to spend about $200,000 a year.” The year he retires may also still include months of salary.
He could also close on the condo this year
There’s a second way to keep the condo away from Medicare. His 2026 return will set his 2028 premiums, and he won’t be on Medicare until 2029. So a gain he takes this year, at 62, never counts toward any premium he pays. He’d just need the sale to close by Dec. 31, less than two months from now.
Frankly, the form matters a lot more to him than the closing date. A 2027 sale costs him $488.40 a year at this year’s rates, and the SSA-44 can erase that along with the much bigger charge his salary brings.
All of these figures are this year’s, and Medicare will have new ones by 2029. And if you’re already on Medicare and recently stopped working, Social Security is sending surcharge notices with its cost-of-living letters this month and next. That’s a good time to check whether SSA-44 applies to you.
Enjoy your retirement in style with these safe 6%+ dividend yields
Dividends can hold the key to enormous wealth. But only if you buy the right ones.
Picking the right high-yield dividend stock can be the difference between a dream retirement…and scraping by every month, waiting for the next Social Security check to clear.
We’ve identified six stocks yielding 6%+ that we believe every retiree should know about right now.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
