During your working years, taxes are largely driven by your paycheck. In retirement, that changes. Your taxable income depends on decisions you make: which accounts to draw from, when to claim Social Security, whether to convert pretax savings to Roth, and when to sell investments. Those choices can also affect Medicare premiums and how much of your Social Security benefit is taxed.
A retirement tax planning advisor helps look at these decisions together over many years rather than one tax return at a time. This guide explains the main concepts, the professionals who are often involved, and the questions to ask as you plan.
Why Retirement Changes the Tax Picture
Several features make retirement tax planning different from planning during your career.
More control over income: Withdrawals from savings are often flexible in timing and amount.
Several account types: Pretax accounts, Roth accounts, and taxable brokerage accounts are taxed differently when you draw from them.
Income-based thresholds: Medicare premiums, Social Security taxation, and the net investment income tax all depend on income levels.
Required distributions: Pretax accounts eventually require minimum withdrawals.
Changing tax law: Rules for retirement accounts and deductions have changed several times in recent years.
Key Areas of Retirement Tax Planning
The Early Retirement Window
The years between leaving work and the start of Social Security and required distributions can bring unusually low taxable income. Some people use that window to realize capital gains at lower rates or to convert part of their pretax savings to Roth, paying tax at what may be lower brackets. Early retirees buying health insurance through an exchange should also consider how income affects premium subsidies.
Required Minimum Distributions
Under current law, required minimum distributions from pretax accounts generally begin at age 73 or 75, depending on birth year. Large pretax balances can create sizable required withdrawals that raise taxable income for years. Planning before RMDs begin can give more options for managing them.
Roth Conversions
Converting pretax savings to Roth means paying tax now in exchange for potentially tax-free withdrawals later and no required distributions for the original owner. Whether that tradeoff makes sense depends on current and expected future tax rates, available cash to pay the tax, and estate goals.
Social Security Taxation
Depending on your total income, up to 85% of Social Security benefits can be taxable at the federal level. The timing of claiming and the level of other income both affect how much is taxed.
Medicare Premiums
Medicare Part B and Part D premiums include income-related adjustments based on your tax return from two years earlier. A large conversion, sale, or distribution at 63 can affect premiums at 65.
Capital Gains in Taxable Accounts
Long-term gains may be taxed at lower federal rates, including a 0% rate for taxpayers below certain income levels. Coordinating sales with other income can affect which rate applies.
Charitable Giving
IRA owners age 70 and a half or older can make qualified charitable distributions directly to charity. These can count toward required distributions without being added to taxable income. Annual limits apply.
Deductions for Older Taxpayers
Taxpayers age 65 and older receive an additional standard deduction, and legislation passed in 2025 added a temporary additional deduction for older taxpayers that phases out at higher incomes. Your CPA can confirm how these apply to your return.
Withdrawal Sequencing
A common question is which accounts to draw from first. There is no single answer. Some approaches draw from taxable accounts first to let tax-advantaged accounts grow, while others blend withdrawals from several account types each year to keep income within a target bracket. The right mix depends on balances, tax rates, Medicare thresholds, and estate plans. Revisiting the approach each year can help keep it aligned with current rules and markets.
A Hypothetical Illustration
Consider a hypothetical couple who retire at 62 with most of their savings in pretax accounts and a taxable brokerage account. If they draw only from the brokerage account until 70, their taxable income may be low for several years, and then rise sharply once Social Security and required distributions begin. An alternative approach might blend modest IRA withdrawals or partial Roth conversions into the early years, which raises taxes then but may reduce required distributions later. Neither path is correct for every household. The example simply shows why multiyear projections can be useful. It is hypothetical and does not represent any actual client.
State Taxes in Retirement
California taxes most retirement income, including IRA and pension distributions, as ordinary income, and it does not tax Social Security benefits. Retirees who move to another state may change their state tax picture, and federal law generally prevents a former state from taxing qualified plan and IRA distributions received by nonresidents.
Planning for Heirs
Tax planning in retirement can also consider who will inherit your accounts. Under current rules, many non-spouse beneficiaries must empty inherited IRAs within ten years, which can create taxable income during their own peak earning years. Roth accounts, beneficiary choices, and charitable bequests of pretax assets are approaches families discuss in this context.
Who Is Involved in Retirement Tax Planning
A retirement tax planning team often includes:
A CPA or enrolled agent: Prepares returns and advises on the tax treatment of transactions.
A financial advisor: Projects income needs, coordinates withdrawals and investment decisions, and models multiyear scenarios.
An estate planning attorney: Drafts wills and trusts and advises on how accounts will pass to heirs.
Questions to Ask a Retirement Tax Planning Advisor
How do you model taxes over multiple years? Look for projections that extend beyond the current return.
How do you coordinate with my CPA? Ask how information is shared and when.
How do you handle Medicare thresholds? Income-related premium adjustments can be easy to overlook.
How do you think about Roth conversions? Ask how they would evaluate the tradeoffs in your situation.
How often will we revisit the plan? Tax law and personal circumstances change.
How Auric Approaches Retirement Tax Planning
Auric Capital Partners' retirement income planning work focuses on designing income strategies that help maintain stability and flexibility, and its tax minimization strategies aim to help planning decisions support after-tax outcomes. Those two services come together in retirement, when withdrawal decisions and tax results are closely linked. The firm coordinates with each client's CPA, who prepares returns and provides formal tax advice.
For retirees, executives approaching retirement, and business owners planning an exit, the process starts with understanding goals and building projections that can be updated each year. You can read our insight on the retirement risk few people plan for, which looks at another side of long-term retirement planning.
Let's Connect
If you are approaching retirement or already retired and want to understand how your withdrawals and taxes fit together, we would welcome the conversation. Contact our Aliso Viejo office or meet with us virtually.
Frequently Asked Questions
What does a retirement tax planning advisor do?
A retirement tax planning advisor helps coordinate withdrawals, Roth conversions, required distributions, Social Security timing, and Medicare thresholds to understand the tax effects of retirement decisions over multiple years, often working with a CPA.
When should I start retirement tax planning?
Some people begin several years before retirement, since the years just before and after leaving work can offer planning opportunities that narrow once required distributions and Social Security begin.
At what age do required minimum distributions start?
Under current law, RMDs generally begin at age 73 for people born from 1951 through 1959 and at age 75 for people born in 1960 or later.
How can I reduce taxes on retirement withdrawals?
Approaches people review include spreading withdrawals across account types, Roth conversions in lower-income years, qualified charitable distributions, and coordinating capital gains with other income.
Does California tax Social Security?
No. California does not tax Social Security benefits, but it generally taxes IRA, 401(k), and pension distributions as ordinary income.
This content is for educational and informational purposes only and should not be considered investment, tax, or legal advice. It is not a recommendation to buy or sell any security or to adopt any particular investment strategy. Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results, and no strategy can guarantee a profit or protect against loss. Please consult with a qualified professional about your individual situation. Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc., Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., a SEC Registered Investment Adviser. Auric Capital Partners is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC.
