Taxes don’t retire when you do. Learn 7 ways to lower taxes in retirement—Roth conversions, RMD planning, QCDs, Social Security timing, capital gains, and more.
Retirement is supposed to be about freedom, flexibility, and enjoying the life you’ve built. But there’s one reality many retirees discover quickly:
Taxes don’t retire when you do.
In fact, for many people, taxes become one of the biggest expenses in retirement. Between required minimum distributions (RMDs), Social Security taxes, investment income, and Medicare surcharges, it’s easy to lose more than you expect to Uncle Sam.
The good news? With smart planning, you can lower your lifetime tax bill—and keep more of your money working for you.
Here are seven proven ways to reduce taxes in retirement.
A Roth conversion moves money from a Traditional IRA into a Roth IRA. You pay taxes today, but the growth and withdrawals are tax-free for life.
The key is timing:
See our full guide: Roth Conversions in Retirement.
If you were born 1951–1959, RMDs begin at age 73.
If you were born 1960 or later, they start at age 75.
These forced withdrawals can push you into higher brackets and increase Medicare costs.
Strategies:
Deep dive: RMD Planning — How to Avoid the Retirement Tax Bomb.
If you give to charity, QCDs are one of the most tax-efficient ways to do it.
Why pay tax on money you’re planning to give away anyway?
The age you start Social Security doesn’t just impact your monthly benefit—it also affects your taxes.
If you have investments in a taxable brokerage account, you may be able to realize long-term capital gains at a 0% tax rate in lower-income years if you are in the 12% marginal tax bracket or lower.
This can be especially powerful in the gap years before RMDs and Social Security. It’s like resetting your cost basis—future gains will be smaller, which means lower taxes later.
Medicare premiums increase if your income crosses certain levels. This surcharge—called IRMAA—is a look back at your income from two years ago.
A good planner will help you model both scenarios.
Where you live—and even when you move—can make a big difference.
Numbers matter, but so does meaning.
Before deciding where to draw from each year, ask:
Your withdrawal strategy should reflect your values and goals, not just minimize taxes. The best plan balances financial efficiency with personal fulfillment.
Mark and Diane, both 65, retired last year with:
They assumed their tax bill would drop in retirement — until their advisor showed that RMDs, dividends, and Social Security would soon push them into a higher bracket.
Their plan:
Annually:
Each Fall / Year-End:
Starting in Your 60s:
Ongoing:
Retirement tax planning isn’t about avoiding taxes altogether — it’s about avoiding surprises and controlling timing.
By combining Roth conversions, RMD management, QCDs, and smart withdrawal sequencing, you can enjoy more of what you’ve built and give less to the IRS.
At Ignite Financial, we help retirees and near-retirees create tax-smart income plans that align their money with their life — and keep their tax bills predictable along the way.
Most retirees think tax planning ends on April 15.
But the truth is, the best opportunities happen in the years between paychecks and RMDs.
Subscribe to our weekly newsletter, for insights that simplify your retirement decisions.
Schedule your free Tax Planning Assessment — we’ll model your income sources and find strategies to lower lifetime taxes.
Join the Newsletter | Schedule Your Assessment
Taxes in retirement are complex—but with the right strategies, you can take control instead of being surprised each April.
The biggest mistake we see? Only looking at this year’s tax bill. The real goal is lowering your lifetime taxes so you can enjoy more freedom, flexibility, and peace of mind.
At Ignite Financial, we help retirees and near-retirees design tax-smart income plans that fit their goals, values, and lifestyle. If you’re wondering whether you’re paying more tax than necessary, let’s run the numbers together.
Yes. Even without a paycheck, retirees often owe taxes on Social Security benefits, IRA or 401(k) withdrawals, pensions, and investment income.
The key is managing when and how that income is realized. With smart planning, many retirees can lower their effective tax rate — sometimes paying less than they did while working.
You can reduce future taxes by:
Each of these moves reduces how much of your pre-tax balance the IRS will tax later.
Most retirees find the best window for conversions is between ages 60 and 70 — after retiring but before Social Security and RMDs begin.
This “tax sweet spot” allows conversions at lower rates and more control over taxable income.
Ultimately, not so much age but is your tax rate lower now than later.
A Qualified Charitable Distribution (QCD) allows you to give directly from your IRA to a qualified charity.
That gift counts toward your RMD but never shows up in your taxable income — lowering both your tax bill and potentially your Medicare IRMAA premiums.
Yes, depending on your income.
Up to 85% of your Social Security benefits can be taxed if your “combined income” (including IRA withdrawals and investment income) exceeds certain thresholds.
Roth withdrawals and QCDs do not count toward that income — making them powerful tools for reducing Social Security taxation.
IRMAA stands for Income-Related Monthly Adjustment Amount.
It’s an income-based surcharge on your Medicare Part B and D premiums.
To avoid crossing thresholds:
It depends on where you live.
In Iowa, most retirement income — including IRA withdrawals, pensions, and annuities — is excluded from state income tax for those age 55 and older.
Still, it’s wise to review multi-state residency rules or withholdings if you split time between states.
Yes — often significantly.
By coordinating conversions, withdrawals, and charitable strategies, many retirees reduce lifetime taxes by $50,000–$100,000 or more, leaving more money to enjoy, give, and pass on.