Skip to content

The Overlooked Retirement Strategy That Could Save You Thousands

The Overlooked Retirement Strategy That Could Save You Thousands
The Overlooked Retirement Strategy That Could Save You Thousands
3:16

When people think about retirement planning, they often focus on the obvious: investment performance, budgeting, and making sure they don’t outlive their money. But there’s one area that can quietly erode your retirement income if ignored or significantly enhance it if handled correctly: taxes.

Tax planning is one of the most overlooked yet most impactful strategies in retirement. Done right, it can potentially save you thousands each year, reduce your lifetime tax bill, and increase your after-tax income without requiring you to save more or take extra risk.

Here are four key areas where smart tax planning can make a major difference:

Get Ahead of RMDs

Required Minimum Distributions (RMDs) from traditional IRAs and 401(k)s begin at age 73 or 75 depending on your birth year, and they can create a significant tax burden in retirement. These withdrawals are taxed as ordinary income and tend to grow over time, often pushing retirees into higher tax brackets.

The best time to plan for RMDs is during the early years of retirement right after you’ve stopped working but before RMDs and Social Security benefits begin. This window allows for strategies like partial Roth conversions or drawing down tax-deferred accounts while your income is low.

Also, for charitably inclined retirees, don’t overlook Qualified Charitable Distributions (QCDs) which is a way to satisfy your RMD by donating directly to charity, keeping the amount donated off your tax return.

Be Strategic About Social Security

Most people are surprised to learn that Social Security can be taxable. Depending on your income, up to 85% of your benefits may be subject to federal tax. That’s why the decision of when to claim isn’t just about maximizing your benefit, it’s also a tax decision.

Coordinating withdrawals from other accounts before claiming Social Security can help keep your income, and your tax bill lower.

Use the Right Withdrawal Sequence

Many retirees have assets in multiple buckets—taxable, tax-deferred, and tax-free. The order in which you draw from these accounts can dramatically affect your taxes.

A one-size-fits-all approach doesn’t work. In some cases, it may make sense to take withdrawals from IRAs early. In others, it might be better to tap into taxable accounts first. The right strategy depends on your income, goals, and longevity expectations.

Make Investment Taxes Work for You

Different investments are taxed differently. IRA and 401(k) withdrawals are taxed as income. Capital gains on appreciated stocks may be taxed at lower rates—or not at all in lower brackets. Roth IRA withdrawals are tax-free.

For retirees in lower tax brackets, capital gains harvesting can be a great opportunity—selling appreciated investments to reset your cost basis with little or no tax impact.


Tax planning is not just for April 15. It’s an essential part of retirement planning that should be reviewed regularly as laws and personal circumstances change.

We build these tax strategies into every retirement plan we design because we know that keeping more of what you’ve earned matters just as much as growing it.