The larger issue in this is whether Social Security benefits and Medicare premiums should be means tested, and if so, what is the mechanism by which the means testing is done. Currently SS and Medicare are means tested, and the mechanisms are the SS benefit tax and IRMAA. The challenge with a means test is how you efficiently and fairly determine "means". Most of us would define "means" as some function of income and total wealth. However, for both SS and IRMAA "means" is defined by some sort of income, ie. it excludes other forms of wealth like brokerage balances, and 401K/IRA balances etc. Brokerage accounts produce taxable interest and dividends, and tax deferred 401k's have RMD's which force taxable income at some point and these affect SSA taxability and IRMAA. However, Roth accounts are not required to be withdrawn at all, and when withdrawals do occur, they have no effect on SSA taxability and IRMAA. That is Roth IRA balances are not included in any means test of SS benefits and Medicare premiums. The question is: is it fair to exclude the means associated with a Roth account while including tax deferred or taxable accounts. The answer is clearly no. The claim that the Roth contributions were already taxed as income and should not have any bearing on SSA taxability and IRMAA is not compelling to me, because the SSA tax and IRMAA not specific taxes on that income. The simple fact that the SSA taxability and IRMAA avoidance are major drivers of Roth conversions, should also tell you that there is an inherent unfairness in excluding Roth income in means testing of SSA and Medicare.
I was somewhat lucky, I guess. In 1985 in the spring of my senior year of high school, our government teacher told us we were a unique group of students in that we would be the first to not receive social security because it was on an unsustainable path. As a result, I kept informed over the years and planned my retirement on the assumption I would never see SS. My point is that this situation was foreseeable 40 years ago if you were paying a little bit of attention. The older generations can blame the government all they want, but in the end the people who are responsible are the ones who voted for them at the time. Putting the burden on a smaller and younger generation who weren't even alive when these decisions were made strikes me as selfish and irresponsible.
It's not going to be any different for younger workers. They will either pay more than the boomers for the same benefits if taxes go up, or will receive fewer benefits for the same level of taxation, or worse fewer benefits and higher taxes.
For two earner couples our current tax system is fairly tax neutral - standard deduction and tax brackets are doubled up to the 35% tax bracket, at which point there is a marriage penalty starting about $768k in combined income. For a single earner couple the system is beneficial. This seems pretty fair and I wouldn't consider it an extraordinary benefit as getting married shouldn't come with a tax penalty. The perks that you allude to are available to all who cohabitate - roommates, non-married significant others etc. You are correct though - it is not so much a widow's tax as a single person's tax. Assuming the married couple were able to leverage their combined earnings into a larger net worth and retirement income than if they were single all their lives, then with proper planning they should be in good shape.
It's less of a paradox when you realize that what wealth buys is free time to do with as you please, i.e. pursue happiness/meaning without the worry/need to earn a living. The things it buys are less important than the freedom from worry about money and poverty.
Agree, I'm always skeptical about these tax lowering maneuvers. My primary goal is current cash flow and wealth growth. A lower tax bill doesn't necessarily lead to that. Run the numbers, and pay more attention to the final after tax cash flow and wealth level.
I don't think you understand how profit incentives work. If profits on premiums are capped at 2-5% there are limited ways to increase profits: increase the number of policies sold at a given price point or increase the price of the policy. Since policy price is regulated as a fraction of healthcare cost - the health insurers have an incentive to see health care costs increase so that their premiums increase so that their profits increase.
Comments
The larger issue in this is whether Social Security benefits and Medicare premiums should be means tested, and if so, what is the mechanism by which the means testing is done. Currently SS and Medicare are means tested, and the mechanisms are the SS benefit tax and IRMAA. The challenge with a means test is how you efficiently and fairly determine "means". Most of us would define "means" as some function of income and total wealth. However, for both SS and IRMAA "means" is defined by some sort of income, ie. it excludes other forms of wealth like brokerage balances, and 401K/IRA balances etc. Brokerage accounts produce taxable interest and dividends, and tax deferred 401k's have RMD's which force taxable income at some point and these affect SSA taxability and IRMAA. However, Roth accounts are not required to be withdrawn at all, and when withdrawals do occur, they have no effect on SSA taxability and IRMAA. That is Roth IRA balances are not included in any means test of SS benefits and Medicare premiums. The question is: is it fair to exclude the means associated with a Roth account while including tax deferred or taxable accounts. The answer is clearly no. The claim that the Roth contributions were already taxed as income and should not have any bearing on SSA taxability and IRMAA is not compelling to me, because the SSA tax and IRMAA not specific taxes on that income. The simple fact that the SSA taxability and IRMAA avoidance are major drivers of Roth conversions, should also tell you that there is an inherent unfairness in excluding Roth income in means testing of SSA and Medicare.
Post: Income taxes on retirees with Social Security
Link to comment from August 17, 2026
I was somewhat lucky, I guess. In 1985 in the spring of my senior year of high school, our government teacher told us we were a unique group of students in that we would be the first to not receive social security because it was on an unsustainable path. As a result, I kept informed over the years and planned my retirement on the assumption I would never see SS. My point is that this situation was foreseeable 40 years ago if you were paying a little bit of attention. The older generations can blame the government all they want, but in the end the people who are responsible are the ones who voted for them at the time. Putting the burden on a smaller and younger generation who weren't even alive when these decisions were made strikes me as selfish and irresponsible.
Post: Short term and long term Social Security planning
Link to comment from August 6, 2026
It's not going to be any different for younger workers. They will either pay more than the boomers for the same benefits if taxes go up, or will receive fewer benefits for the same level of taxation, or worse fewer benefits and higher taxes.
Post: Short term and long term Social Security planning
Link to comment from August 5, 2026
For two earner couples our current tax system is fairly tax neutral - standard deduction and tax brackets are doubled up to the 35% tax bracket, at which point there is a marriage penalty starting about $768k in combined income. For a single earner couple the system is beneficial. This seems pretty fair and I wouldn't consider it an extraordinary benefit as getting married shouldn't come with a tax penalty. The perks that you allude to are available to all who cohabitate - roommates, non-married significant others etc. You are correct though - it is not so much a widow's tax as a single person's tax. Assuming the married couple were able to leverage their combined earnings into a larger net worth and retirement income than if they were single all their lives, then with proper planning they should be in good shape.
Post: Widow Tax
Link to comment from July 29, 2026
It's less of a paradox when you realize that what wealth buys is free time to do with as you please, i.e. pursue happiness/meaning without the worry/need to earn a living. The things it buys are less important than the freedom from worry about money and poverty.
Post: The Paradox of Wealth
Link to comment from July 16, 2026
Agree, I'm always skeptical about these tax lowering maneuvers. My primary goal is current cash flow and wealth growth. A lower tax bill doesn't necessarily lead to that. Run the numbers, and pay more attention to the final after tax cash flow and wealth level.
Post: Will Your Death Double Your Spouse’s Tax Bill?
Link to comment from July 16, 2026
I don't think you understand how profit incentives work. If profits on premiums are capped at 2-5% there are limited ways to increase profits: increase the number of policies sold at a given price point or increase the price of the policy. Since policy price is regulated as a fraction of healthcare cost - the health insurers have an incentive to see health care costs increase so that their premiums increase so that their profits increase.
Post: A discussion on health insurance, premiums, profits and such- a 50 year perspective most people don’t want to accept
Link to comment from July 16, 2026
Thanks for posting. Excellent article that many should read.
Post: About that inflation in retirement
Link to comment from July 13, 2026
Excellent post. Will definitely use for future planning.
Post: Don’t Let a Roth Conversion Trigger a Penalty
Link to comment from July 9, 2026
....and inflation stays relatively tame.
Post: Automatic Income stream? How important to you?
Link to comment from June 27, 2026