Tax Planning for Retirees
Most retirees pay far more in taxes than they need to over a 25-30 year retirement — not because they break the rules, but because they don't plan around them. The window between retirement and age 73 (when Required Minimum Distributions begin) is often the lowest tax-rate period of your life, and the decisions you make in that window matter for decades.
How we approach tax planning
We think about your taxes in decades, not in tax years. That means:
- →Multi-year tax projections to see where your income is heading and where the planning opportunities are
- →Tax bracket management — strategically filling lower brackets and avoiding higher ones
- →Roth conversion strategy — using the years before Social Security and RMDs to move pre-tax dollars to Roth at lower tax rates
- →Withdrawal sequencing — deciding which accounts to draw from in which years to minimize lifetime taxes
- →Coordination with Social Security and RMDs — so one decision doesn't undermine another
- →Healthcare cost coordination — managing income to optimize Medicare premiums (IRMAA)
The three-bucket framework we like
One concept we find genuinely useful in tax planning is thinking about your retirement assets in three “buckets”:
- →Taxable bucket — brokerage accounts and cash, taxed on growth and income
- →Tax-deferred bucket — traditional IRAs and 401(k)s, taxed when you withdraw
- →Tax-free bucket — Roth IRAs, Roth 401(k)s, and HSAs, generally tax-free in retirement
Most retirees we work with have heavy balances in the tax-deferred bucket and underutilize the tax-free bucket. A coordinated plan often moves assets between buckets over time to optimize lifetime taxes — particularly through Roth conversions during the lower-tax-rate window between retirement and age 73.
About tax planning for retirees.
Should I do a Roth conversion?
For many pre-retirees, yes — but timing and amount matter enormously. The window between retirement and starting Social Security or RMDs is often the lowest tax-rate period of your life. Converting traditional IRA dollars to Roth during that window can save substantial taxes over a lifetime. But conversions are taxable events, so doing them in the wrong year or wrong amount can backfire.
What's the biggest tax mistake retirees make?
Waiting too long to plan. By the time RMDs start at age 73, many of the most powerful planning opportunities (especially Roth conversions) have passed. The five to ten years before RMDs are when the most valuable tax planning happens.
Do you give tax advice?
We provide tax planning — the strategic side of taxes — and coordinate closely with your CPA for the filing side. We don't prepare returns, but we work with your tax professional to make sure the strategy and the execution align.
Ready to see how tax planning for retirees fits your plan?
The first 30 minutes are complimentary. We'll talk through your situation and whether we're the right fit.