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Welcome to the latest edition of the Healy Wealth Management newsletter, your monthly guide to navigating the financial complexities of life.
Let us know your thoughts. And if there’s something that could benefit a friend or family member, please send it their way.
A rocket launch is a helpful illustration of how retirement actually works. The same forces that determine whether a rocket soars or crashes are the same ones shaping your financial future right now. How much fuel you have, what kind, and how hard you run the engine all matter more than most people realize. And altitude changes everything. Get high enough off the ground (in orbit?) and risk fades.
Click on the video below to see your current savings, investments, and risk in a whole new way.
A butcher is 6 feet tall and 44, 34, and 34 inches at the chest, waist, and hips.
What does he weigh?
Every year, starting in late November, a letter begins arriving in mailboxes across the country. It comes from the Social Security Administration. It says, in so many words, that your Medicare premiums are going up — because of income you earned two years ago.
The timing is rarely welcome. People are winding down for the year, thinking about the holidays, and suddenly there is a government notice telling them they owe more for their health coverage. The immediate reaction, almost universally, is the same: Did I do something wrong?
That surcharge has a name. It is called the Income-Related Monthly Adjustment Amount, or IRMAA. And the answer to that question — did I do something wrong — is almost never as simple as the letter makes it feel.
What IRMAA Actually Is
IRMAA is a surcharge added to your Medicare Parts B and D premiums. It is triggered when your income exceeds certain thresholds.
The key mechanic to understand is the two-year lookback. Medicare does not assess your current income. It looks at what you reported to the IRS two years earlier. So your 2026 premiums are based on your 2024 income. Cross a threshold in that prior year and your premiums go up — regardless of what your income looks like today.
Depending on how far over the threshold your income fell, the surcharge can run as high as almost $14,000 annually for a married couple. It is real money. But whether it represents a problem depends entirely on context.
Why It Feels Worse Than It Is
When that letter arrives, it rarely lands as a neutral data point. It triggers a review of recent decisions. The Roth conversion from two years ago. The capital gains that were realized. The income that was pulled forward. The second-guessing begins: Should I have caught this? How did I miss it?
At that point, the surcharge stops being a surcharge. It becomes a symbol of a mistake — even when no mistake was made.
The wealth management industry has not helped matters. Advisors tend to fall into one of two camps. The first treats IRMAA as trivial: if you’re paying more, it means you earned more. That is technically true, but it completely misses the emotional experience of receiving the letter. The second camp treats the thresholds as lines that must never be crossed — where crossing means you failed and staying below means you succeeded.
Both approaches share the same flaw. They make the threshold the center of the story, rather than the person’s actual financial goals.
When IRMAA Is the Right Trade-Off
Consider Peggy. She is 65 and recently retired. Her income for 2026 will be lower than when her required minimum distributions begin when she’s 75. That gap — between today’s lower income and tomorrow’s higher income — represents a planning opportunity.
Her advisor recommends a Roth conversion. The math is straightforward: converting now, at a lower tax rate, reduces the IRA balance that will eventually be forced out as taxable RMDs. The trade-off is also straightforward: the conversion pushes her income across the first IRMAA threshold, which will cost her $1,150 in higher Medicare premiums in 2028.
That $1,150 is real. But the potential long-term tax savings from converting at a lower rate — spread across many years of reduced RMDs — is considerably larger, assuming the underlying assumptions hold. The Roth conversion made sense. IRMAA was simply the cost of a sound decision.
Not doing the conversion — specifically to avoid crossing the IRMAA threshold — would have been the mistake.
When Peggy’s letter arrives in late November, two years from now, it will not be evidence of poor planning. It will be confirmation that the plan is unfolding exactly as intended.
There Is Still Time to Plan for 2028
Here is where planning creates real value. Your 2027 Medicare premiums are based on 2025 income — that year is closed. But your 2028 premiums will be based on your 2026 income, and the year is less than half over.
That means there is still time to make decisions — Roth conversions, capital gains timing, income deferral — that could affect whether you cross an IRMAA threshold in 2028, and whether crossing it makes sense for your situation. The window closes December 31.
Not everyone needs to be concerned about IRMAA. For some clients, income will stay comfortably below the thresholds regardless. For others, a threshold crossing is not only likely but potentially worth doing deliberately — as Peggy’s story illustrates. The relevant question is whether it applies to you, and if so, whether action before year-end makes sense.
That is a conversation worth having now. If you would like to talk through your own situation and determine whether 2026 income planning is relevant for you, we welcome that conversation. Knowing what is ahead goes a long way toward making sure the letter — if it comes — arrives as confirmation rather than surprise.
“I tell you, I don’t get a break with nothing.
I joined Gamblers Anonymous.
They gave me two-to-one odds I don’t make it.”
– Rodney Dangerfield
“Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?”
– George Carlin
Most financial mistakes are not math problems. They are not caused by ignorance of compound interest, asset allocation, or tax efficiency. They are caused by something harder to fix: the way we are wired. Morgan Housel argues in The Psychology of Money that financial success depends far less on what you know than on how you behave — and behavior is shaped by emotion, ego, and stories we tell ourselves under pressure.
Three dysfunctions show up more than any others:
The Performance Trap
There is nothing wrong with nice things. A beautiful home, a well-made car, a memorable vacation — these are legitimate rewards for hard work and good decisions. The dysfunction is not in the purchase. It’s in the motive behind it. Housel describes what he calls the “man in the car paradox”: when you see someone in an expensive car, you rarely think about the driver. You imagine yourself in it. The admiration we expect from others is mostly a projection — they are thinking about themselves, not us.
When the signal becomes the point, two things happen quietly. Spending rises to maintain the appearance, and satisfaction never quite arrives because the audience we were performing for was never really watching.
The result is a cycle that is expensive to run and emotionally empty at the finish line.
The Identity Trap
Everyone’s relationship with money is shaped by what they lived through. People who built wealth through decades of discipline and careful saving were formed by experiences that made frugality feel not just smart but necessary. The trap is that wiring rarely updates when the goal changes — the accumulator who cannot spend down principal is running a program written in an earlier chapter of life. The same principle cuts the other way. Someone who came of age during a long bull market, or inherited wealth without experiencing its loss, may carry a deep and unexamined confidence that risk pays off. It usually has — for them, so far. Both are prisoners of their own financial biography. The antidote is recognizing that the experiences that shaped your money instincts were real, but they were not the whole story. A honest conversation about what this season of life actually calls for is usually where that update begins.
The Downside Trap
Losing money does not feel like the mirror image of gaining it. Research by Kahneman and Tversky found that losses hit roughly twice as hard psychologically as equivalent gains feel good. Housel builds on this: the instinct to sell during a downturn is not irrational — it is the brain eliminating a source of pain. The problem is that markets reward the people who sit with that discomfort. The losses avoided by selling are visible and feel like relief. The gains forfeited by being out of the market are invisible and feel like nothing — even when they are far larger. Over time, this asymmetry quietly compounds. Investors who exit during downturns not only miss the recovery, they often re-enter late, after confidence returns and prices have already risen. The long-term cost of that pattern dwarfs the short-term pain it was designed to avoid.
None of these are knowledge problems. Your financial life improves not when you learn something new, but when you close the gap between what you know and how you actually behave when it counts.
Warren Buffett’s late partner Charlie Munger had a phrase for the competitive trap that swallows entire industries: “standing on tiptoe at a parade.” Once one person does it, everyone has to. Nobody sees better. Everyone’s legs hurt.
That phrase may be the most precise description available of what is happening in artificial intelligence today.
The five largest technology companies — Amazon, Alphabet, Meta, Microsoft, and Oracle — have committed to spending between $660 and $690 billion on AI infrastructure in 2026 alone, nearly doubling what they spent in 2025. Goldman Sachs projects cumulative AI capital expenditure of $7.6 trillion between now and 2031. KKR has noted that projected global data center spending through 2030 approaches $7 trillion — roughly the combined GDP of Japan and Germany.
The scale is staggering. The return on that investment is not yet visible.
Michael Burry, who called the 2008 housing collapse while Wall Street was still celebrating – as played by Christian Bale in the popular movie “The Big Short” – framed it this way: Buffett once owned a Baltimore department store. When the competitor across the street installed an escalator, Buffett had to as well. In the end, neither store was better off. No margin improvement. No cost advantage. No competitive moat. Just a more expensive building, and two stores in exactly the same position they started in. Burry argues that is how most AI implementation will play out — because when every competitor installs the same escalator simultaneously, none of them gains an advantage. The value accrues to the customer, not the investor who paid for the escalator.
Unlike search, where Google’s data flywheel produced a genuine winner-take-all outcome over two decades, AI infrastructure has no such network effect. Model leadership has rotated among OpenAI, Google, and Anthropic multiple times in three years. Enterprises are responding by refusing long-term commitments and keeping budgets flexible. No hyperscaler is pulling away.
The productivity story is real, but arriving slowly. Gartner’s enterprise data shows companies are not replacing workers — they are simply not refilling positions when people leave. Headcount containment, not transformation. Who ultimately captures the value from those productivity gains remains an open question.
That open question is not one we are in the business of answering. Predicting which company wins from a technology shift is speculation. What we can say with confidence is that spending $7 trillion to stand on tiptoe is not, by itself, a path to durable return on invested capital — and that the history of infrastructure booms suggests the equity winners are rarely the ones who built the pipes.
After May 23, the next time you log into Account View, you will be prompted to confirm how you’d like to receive your statements and documents. The default will be electronic delivery.
In today’s environment, keeping sensitive financial documents out of your physical mailbox is one of the simplest things you can do to protect yourself from identity theft and mail fraud. Paperless also means faster access — your documents are available the moment they’re ready, in one secure place.
If you prefer to stay with paper, that option is still there. We just didn’t want the prompt to catch you off guard.
Any questions? Please give us a call.
“Compound interest is the eighth wonder of the world.
He who understands it, earns it … he who doesn’t … pays it.”
Albert Einstein
Answer:
Meat.