Tax Bracket Management in Retirement

📈 Why Tax Bracket Management Matters

Your tax bracket can vary significantly in retirement depending on when and how you take income. Poorly timed withdrawals can trigger higher taxes, IRMAA surcharges, or even taxation of your Social Security benefits. Smart tax bracket management can help you pay less over your lifetime, not just this year.

✅ Key Strategies

1. Fill Up Lower Tax Brackets

• Use Roth conversions or IRA withdrawals to fill the 10%, 12%, or 22% brackets.

2. Delay Social Security

• Reduces taxable income in early years and opens a “Roth conversion window.”

3. Control RMD Impact

• Preemptively reduce account balances via strategic conversions or early withdrawals.

4. Coordinate With Capital Gains

• Long-term capital gains are taxed at 0% if you stay in low income thresholds.

5. Monitor IRMAA and Other Thresholds

• Small increases in income can lead to big Medicare premium hikes.

📅 Timing Examples

Ages 60–70:

• Ideal for partial Roth conversions and long-term planning.

• Use taxable accounts to support lifestyle while converting in low tax years.

Ages 70–73:

• Plan for incoming RMDs; coordinate with QCDs if charitably inclined.

• Be careful with combined income from RMDs, Social Security, and portfolio withdrawals.

Ages 73+:

• RMDs now required; balance tax management with spending needs.

🏛️ Common Pitfalls to Avoid

• Triggering IRMAA brackets without realizing it

• Forgetting capital gains stack on top of ordinary income

• Missing opportunities for tax-free or low-tax Roth conversions

• Waiting too long to act and compressing your planning window

This guide is for educational purposes only and does not constitute tax or financial advice.