Retirees wait for the day they can sell their homes and cash in—but there’s a secret Medicare ‘trap’ that could stop them in their tracks

Aside from loads of extra free time and the freedom to pursue new hobbies, one of the most exciting moments of retirement can be when it’s finally time to sell the family home and downsize. Not only does it mean less maintenance on a home, but it can also be a great financial boon—especially thanks to multi-decade home appreciation. 

Typically, Americans start retirement and the downsizing process in their mid 50s to mid 60s, with some waiting until their 70s or 80s. But there’s a major consideration to be made when deciding the right time to sell the family home and downsize—and it could be a make-it or break-it monthly health care expense. 

It comes down to a Medicare premium surcharge called an income-related monthly adjustment amount (IRMAA). When you turn 65, you qualify for the government health insurance for seniors, Medicare. It charges monthly premiums, but if you earn a lot of money in a given year—say, through a major home sale—those premiums spike dramatically due to the IRMAA surcharge. 

For Mike McCracken, president and founder of Wealth Guide Financial, the “number one mistake” he sees is when a home is sold too close to or after turning age 63 without running the numbers first. 

“You see, Medicare looks back two years at your tax return to calculate IRMAA,” McCracken told Fortune. “If you sell in 2025 at age 64, and that capital gain shows up on your 2025 return, it can trigger........

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