Retirement Tax Planning
Stop Overpaying Taxes in Retirement
Income taxes are often your largest retirement expense—but they don’t have to be
Most retirees pay thousands more in taxes than necessary every year. With strategic tax planning, you can keep more of your hard-earned money working for you instead of going to the IRS.
The Hidden Retirement Expense Most People Ignore
Income Taxes
The reality: For many retirees, federal and state income taxes consume 15-30% or more of their retirement income every single year. That’s often MORE than they spend on housing, healthcare, or any other single expense.
The tragedy: Most of this tax burden is completely avoidable with proactive planning. Yet most retirees discover these strategies too late—after they’ve already paid hundreds of thousands in unnecessary taxes.
Why Most Retirees Overpay Taxes
Without specialized tax planning, retirees typically make these costly mistakes:
- Reactive instead of proactive approach – Only thinking about taxes at tax time instead of year-round strategic planning
- Ignoring tax bracket management – Taking distributions that push income into higher tax brackets unnecessarily
- Missing the Roth conversion window – Not converting traditional IRA funds during low-income years before RMDs kick in
- Poor withdrawal sequencing – Drawing from accounts in the wrong order and triggering avoidable taxes
- Social Security timing mistakes – Not coordinating benefits with other income to minimize taxation
- RMD sticker shock – Suddenly facing massive Required Minimum Distributions at age 73+ with no strategy to reduce them
- Medicare IRMAA penalties – Inadvertently triggering higher Medicare premiums by pushing income over MAGI thresholds
- Inefficient charitable giving – Making donations with after-tax dollars instead of using QCDs or donor-advised funds
The Cost of Not Planning
A typical retiree with $1 million in retirement assets could easily overpay $10,000 – $20,000 per year in avoidable taxes.
Over a 25-year retirement, that’s $250,000 – $500,000 that could have stayed in your family instead of going to the IRS.
The question isn’t whether you can afford tax planning—it’s whether you can afford NOT to plan.
Our Retirement Tax Minimization Strategies
Roth Conversion Planning
Convert traditional IRA funds to Roth during strategic low-income years (typically ages 60-72), paying taxes at lower rates now to enjoy completely tax-free income later—and eliminate future RMDs entirely.
Tax-Efficient Withdrawal Sequencing
Orchestrate which accounts you draw from and when, optimizing the order of taxable, tax-deferred, and tax-free withdrawals to keep you in lower tax brackets throughout retirement.
RMD Reduction Strategies
Proactively reduce future Required Minimum Distributions through strategic Roth conversions, QCDs, and other techniques—before the IRS forces large taxable distributions at age 73+.
Social Security Optimization
Coordinate Social Security claiming strategies with other retirement income to minimize taxes on benefits (up to 85% of benefits can be taxable without proper planning).
Qualified Charitable Distributions (QCDs)
If you’re charitably inclined, direct up to $105,000 annually from your IRA straight to charity after age 70½—satisfying RMDs without increasing taxable income.
Medicare IRMAA Management
Carefully manage your Modified Adjusted Gross Income (MAGI) to avoid triggering Income-Related Monthly Adjustment Amounts that can add $500-$6,000+ annually to Medicare premiums.
Capital Gains Harvesting
Strategically realize investment gains in years when you’re in the 0% capital gains bracket, or harvest losses to offset gains—building a more tax-efficient portfolio.
Asset Location Strategy
Position investments tax-efficiently across taxable, tax-deferred, and tax-free accounts—putting tax-inefficient assets where they’ll do the least damage to your tax bill.
State Tax Planning
For those considering relocation, analyze state tax implications on retirement income, Social Security, pensions, and estate taxes—potentially saving thousands annually.
Special Tax Considerations for Life Transitions
Certain life events create unique tax planning opportunities and challenges in retirement:
Widows and Widowers
Losing a spouse dramatically changes your tax picture. The shift from married filing jointly to single filing status brings:
- Compressed tax brackets – You hit higher tax rates at roughly half the income
- Reduced standard deduction – Cut nearly in half
- Inherited IRA decisions – Critical choices about beneficiary accounts with 10-year distribution rules
- Two-year Qualifying Widow(er) status – A brief window to maintain favorable tax treatment if you have dependent children
Proactive planning during the first few years after loss can save tens of thousands in lifetime taxes while you navigate this difficult transition.
Inheritance and Estate Considerations
Inheriting assets or passing wealth to heirs requires careful tax planning around step-up in basis rules, inherited IRA distributions, estate tax exemptions, and trust structures.
Business Owners Entering Retirement
Exiting a business brings complex tax implications around sale proceeds, installment sales, Section 1202 exclusions, and retirement plan rollovers that require specialized expertise.
The Fero Financial Tax Planning Process
1. Comprehensive Tax Analysis
We start by analyzing your complete financial picture: all income sources, retirement accounts, investments, Social Security, pensions, and more. We identify exactly where you’re overpaying taxes and quantify the opportunity.
2. Multi-Year Tax Projection
Unlike most advisors who only look at this year, we project your tax situation 10-30 years into the future, modeling different strategies to find the optimal path that minimizes lifetime taxes.
3. Customized Strategy Blueprint
We create a personalized, year-by-year tax minimization roadmap showing exactly what actions to take and when—Roth conversions, withdrawal amounts, tax-loss harvesting, charitable giving, and more.
4. Coordinated Implementation
We don’t just hand you a plan—we actively coordinate with your CPA and help implement each strategy at the right time, ensuring nothing falls through the cracks.
5. Ongoing Monitoring and Adjustment
Tax laws change. Your life changes. Markets change. We continuously monitor your plan and make adjustments to keep your strategy optimized year after year.
Who Benefits Most from Retirement Tax Planning?
Our specialized tax planning delivers the greatest value for:
- Pre-retirees and early retirees (ages 55-72) – You have the most opportunity to implement tax-saving strategies before RMDs begin
- High-income professionals approaching retirement – Your accumulated retirement assets will trigger substantial future taxes without planning
- Those with $500K+ in retirement accounts – Larger account balances mean larger tax bills—and larger savings opportunities
- Widows and widowers – Your tax situation changed dramatically and needs immediate strategic attention
- Charitably-minded retirees – We can make your giving significantly more tax-efficient
- Those facing required minimum distributions – If you’re 72+ and RMDs are creating a tax burden, we still have strategies to help
- Business owners transitioning to retirement – Complex tax situations requiring sophisticated planning
- Multi-state retirees – Navigating state tax implications of relocation or multiple residences
Common Questions About Retirement Tax Planning
How much can I really save?
Most clients save $10,000 – $20,000+ annually in reduced taxes. Over a 20-30 year retirement, this typically translates to $200,000 – $500,000+ in lifetime tax savings. The specific amount depends on your account balances, income sources, and current tax situation.
Is it too late if I’m already retired?
It’s never too late, though earlier is always better. Even if you’re already taking RMDs, we can still implement strategies to reduce your future tax burden. However, the biggest opportunities exist in the “golden window” between retirement and age 73 when RMDs begin.
Does your investment professional ask for your tax return?
Most don’t—and that’s a problem. Your tax return reveals critical information that should drive your investment and distribution strategies: your actual tax bracket, sources of income, deduction opportunities, and potential tax-saving moves. At Fero Financial, reviewing your tax returns is a standard part of our comprehensive planning process. We analyze them annually to identify opportunities your CPA may not address and to ensure your investment strategy aligns with tax efficiency. If your advisor isn’t asking to see your returns, they’re planning with incomplete information.
Don’t I just need a good CPA?
CPAs are essential for tax return preparation and compliance, and we never replace that relationship. What we do is different: as CFP® professionals, we provide proactive multi-year tax strategy as part of your comprehensive financial plan. We model the long-term tax impact of different strategies, then coordinate with your CPA to implement them. Your CPA prepares your returns; we design the strategy that minimizes what goes on those returns.
What’s the difference between tax planning and tax preparation?
Tax preparation (done by your CPA) looks backward—filing returns for last year based on decisions already made. Tax planning (what we do as financial planners) looks forward—strategically positioning your finances 10-30 years out to minimize lifetime taxes. We create the multi-year roadmap; your CPA executes the annual compliance. Both are essential, and we work together as a team for your benefit.
Do tax laws change too much to plan ahead?
While tax laws do change, the fundamental strategies—Roth conversions, withdrawal sequencing, charitable giving, etc.—remain valuable regardless. We continuously monitor changes and adjust your plan accordingly. Doing nothing because laws might change is far more costly than planning and adapting.
Stop Overpaying Taxes—Start Keeping More
Every year you delay is another year of unnecessary taxes paid to the IRS instead of staying in your pocket.
Get started with a complimentary retirement tax analysis to discover exactly how much you could be saving.
No obligation • Completely confidential • Discover your tax-saving opportunities
Schedule Your 30-Minute Transition Strategy Call
Work With a Certified Professional
Rebekah J. Fero, CFP®, AIF®
