You did it.
You worked hard, saved steadily, and are now either enjoying retirement or anticipating it.
You've been advised for years that you should save money for retirement, delay taxes, and enjoy your golden years. But...no one told you?
Seriously.
Including Social Security income, RMDs, capital gains, Medicare premium adjustments, and state taxes... It can seem like a financial ambush.
Let's look at why this happens—and what you can do now to soften the blow.
For years, traditional IRAs and 401(k)s have provided tax-deferred savings. However, the IRS eventually wants its cut.
That’s where RMDs come in.
When you reach age 73, you must withdraw money from your retirement savings, which are taxed as ordinary income.
Why it matters:
● Your RMD may put you in a higher tax rate.
● It may result in higher Medicare rates (thanks, IRMAA).
● It may affect how much of your Social Security is taxed
What to do now:
Consider Roth conversions in your 60s to decrease your future required minimum distributions. Yes, you will pay taxes now, but it may save you a lot of money in the future.
Depending on your overall income, up to 85% of your Social Security benefits may be taxed, including investment income, part-time work, and RMDs.
Here’s the trap:
You assume you get $3,000 every month from Social Security.
But add a few thousand from another source, and a large portion of that becomes taxable.
Solution:
Before you start using your benefits, consult with an advisor who can help you plan your income. Waiting a year or two, or tweaking your withdrawal plan, can sometimes result in significant tax savings.
This one stings.
You file your taxes, have a terrific year, and then boom—two years later, your Medicare premiums rise.
That is IRMAA (Income-Related Monthly Adjustment Amount).
If your income surpasses specific limits, you will pay extra for Medicare Parts B and D, even if the increase was due to a one-time event such as a Roth conversion or asset sale.
Proactive planning = lower premiums.
A well-timed income approach can help you stay just below IRMAA thresholds. In some situations, you can seek an appeal based on a "life-changing event" such as retirement or a loss of income.
Are you selling your long-held investments? Are you downsizing your home? These financial gains may increase your income over expectations, triggering a cascade effect with taxes, Medicare, and Social Security.
Even if you are "living off savings," your tax return may reveal a different picture.
pro tip :
For some income brackets, capital gains are taxed at 0%. With the appropriate method, you can sell appreciated assets without incurring taxes—but timing is critical.
Not all states treat retirees the same.
Some tax Social Security, while others do not. Some provide pension exemptions, while others tax everything.
If you're considering relocating in retirement, don't just compare housing prices. Compare taxation policies. What if you're remaining put? Learn how your current situation affects your bottom line.
A difficult but crucial reality: Losing a spouse in retirement frequently means transitioning from "Married Filing Jointly" to "Single."
Which means:
● Reduced standard deductions
● Stricter income limits
● Higher tax bills for the same income.
If you've recently been bereaved or are planning to be widowed, it's important to develop a multi-year tax strategy now rather than later.
The retirement tax situation is not DIY-friendly. Rules change. Thresholds shift. And a single bad move (or lost chance) can cost you thousands.
But with the right guide, you can:
● Smooth income over time
● Lower your lifetime tax burden
● Maximize Social Security and Medicare benefits
● Keep more of your hard-earned money.
You planned for retirement. Now is the time to start thinking about retirement taxes.
We're here to help you make sensible, proactive decisions that eliminate surprises, lower your tax burden, and give you the confidence to enjoy the years ahead.
Contact our office immediately to set up a retirement tax consultation. You've saved—now make sure you keep more of it.
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