Taxes in Retirement:
The IRS Has a Plan for Your Retirement — Do You?
Most retirees don’t realize that taxes don’t go away in retirement—they just get sneakier.
Without a coordinated tax plan, you could unknowingly trigger a chain reaction: higher Social Security taxes, Medicare, IRMAA surcharges, and ballooning RMDs that, shove you into a higher bracket.
“If You Don’t Have a Tax Strategy, You Are the Strategy.”
That’s why a Real Tax-Smart Retirement Plan doesn’t just look at what you have—it shows you what to do about it.
Whether you’re retiring in 5 years or 15, you’ll finally stop guessing and start planning—with clarity and confidence tailored to your retirement horizon.
What You’ll See in a Real Tax-Smart Retirement Plan
Visual comparisons. Clear outcomes.
No guessing, no gut feelings, no generic advice.
your personalized roadmap that shows you what to do in plain terms.
Real-Life “What If” Planning You Can Actually Understand
- A “Tax Tripwire” map that reveals how your income can trigger stealth taxes on Social Security and jack up your Medicare premiums (hello, IRMAA).
- Strategic Roth conversions designed to outsmart tomorrow’s tax brackets—not just today’s.
- RMD sneak previews so you don’t get ambushed by surprise tax hikes down the road.
- Withdrawal sequencing with a brain, pulling from the right accounts at the right time to legally shrink your tax bill and stretch your nest egg.
Top 7 Mistakes Retirees Make with Taxes in Retirement – And How to Fix Them
1
Forgetting the IRS Owns Part of Your 401(k)/IRA
Not Accounting for the Hidden Tax Bill on Your 401(k) & IRA
You might see a $1 million balance and think it’s all yours — but the IRS sees it as a joint account. Every withdrawal from your traditional IRA or 401(k) is taxable income. That means a decent chunk of your retirement savings may quietly vanish to federal and state taxes unless you plan around it.
What to Do:
Start converting slices of your pre-tax accounts into Roth IRAs while you’re in lower tax years — especially between retirement and age 73. Be intentional with your withdrawal strategy to minimize lifetime taxes, not just taxes this year.
2
Letting the Tax Bomb Go Off at Age 73
Not Understanding RMDs — The Retirement Tax “Time Bomb”
Required Minimum Distributions (RMDs) kick in at age 73 whether you want them or not — and they can shove you into a higher tax bracket, trigger Social Security taxation, and slap you with Medicare IRMAA penalties. The longer you delay withdrawals, the bigger the RMD... and the bigger the tax surprise.
What to Do:
Use the window between retirement and 73 to strategically draw down your IRA. Run a “bracket-fill” Roth conversion plan or consider using QCDs after age 70½. Don't wait until the IRS forces your hand.
3
Believing You’ll Be in a Lower Tax Bracket Later
Assuming You Can Just “Wait It Out”
Retirees often think, “I won’t earn as much in retirement, so I’ll pay less in taxes.” But here’s the trap: fewer deductions, RMDs, and even Social Security income can keep your bracket just as high — or higher. And “permanent” tax brackets can still change (translation: go up).
What to Do:
Project your future taxable income based on realistic retirement expenses, not wishful thinking. Use this insight to front-load Roth conversions, reposition assets, or shift income into tax-free vehicles while rates are still favorable.
4
Ignoring How Your Income Affects Your Healthcare Costs
Overlooking IRMAA and the Taxation of Social Security
Once your total income crosses certain thresholds, you’ll pay more for taxable. Medicare Part B and D (IRMAA), and more of your Social Security becomes These aren’t “taxes” per se, but they sure feel like it when your net income shrinks by thousands.
What to Do:
Track your MAGI (Modified Adjusted Gross Income)
closely. Consider annuities, Roth conversions, or spreading out income over time to stay under IRMAA cliffs. This is where income sequencing and asset location become tactical tools, not buzzwords.
5
Planning Your Income... Without a Plan
Assuming Everything Will Just Work Itself Out
Most retirees think they have a retirement income plan — but what they really have is a pile of accounts and no coordinated strategy. Taxes, income sources, healthcare costs, timing... they all interact. And without a plan, those interactions can create chaos.
What to Do:
Run a full retirement income plan before making any moves. This means modeling cash flow, taxes, withdrawal sequencing, Roth opportunities, Social Security timing, and IRMAA impacts. Understand how tools can show you how each decision ripples across your financial life — and where to adjust.
6
Ignoring Roth Conversions Because of the “Big Tax Bill” Now
Short-Term Pain, Long-Term Gain
Many retirees avoid Roth conversions because they don’t want to “create” a tax bill. But what they’re missing is the bigger, longer-term tax storm headed their way — RMDs, IRMAA penalties, and higher Social Security taxation.
What to Do:
Strategic, bite-sized Roth conversions can sidestep future RMDs, reduce taxable income in your 70s and 80s, and create a stream of tax-free income for life. With today's lower brackets (thanks TCJA), now may be the most affordable time to convert.
7
Thinking Life Insurance and Annuities Are Just for Death or Income
Overlooking Powerful Tax Planning Tools
A lot of folks think life insurance and annuities are either for dying or retiring — but not for taxes. That’s a costly
myth. Properly structured, these tools can transform taxable assets into tax-advantaged strategies.
What to Do About It:
Indexed Universal Life (IUL) policies can act as “tax-free retirement accounts” via policy loans. Annuities funded with after-tax or Roth dollars eliminate RMDs and often come with upfront premium bonuses — some north of 20% — that can help offset conversion taxes or fund LTC benefits.