At Dunes Financial, we believe that a great retirement plan isn’t just about lowering taxes—it’s about making sure your wealth supports the life you want to live. That means ensuring you have a well-structured income plan, a thoughtful investment strategy, and a clear understanding of how your assets will fund your retirement goals. Once that foundation is in place, then we fine-tune tax strategies to maximize your income. In my years of working with retirees, I’ve seen avoidable tax mistakes that can lead to big surprises. Here’s how you can plan smarter.
Many retirees, or their financial advisors, assume that a blanket withholding rate—such as 10% or 15%—is sufficient for tax withholding. However, as your income fluctuates in retirement, such as starting Social Security, taking Required Minimum Distributions (RMDs), or executing Roth conversions, this blanket approach can lead to major tax headaches such as an unexpected tax bill next year or even additional penalties and fees for under withholding. As your life changes in retirement, we believe your advisor should be proactively addressing your annual tax withholding and helping you make updates to avoid those headaches.
Many retirees focus on federal tax planning but neglect opportunities to reduce state taxes. Depending on your state, strategies such as 529 contributions, making sure your accountant is deducting U.S. Treasury & other US obligation bond interest, and making sure other deductions are included can help minimize your overall tax burden. This is why we believe an annual income tax review is an important part of working with a financial advisor to address any state-specific tax-saving opportunities.
Tax planning in retirement is not a one-time event—it evolves as you move through different phases:
Before Social Security – Lower income years may present an opportunity to convert pre-tax funds to Roth at a low tax rate.
Between Social Security & RMDs – Roth conversions may still be beneficial, but the strategy needs to account for Social Security taxation and potential IRMAA (Medicare Income-Related Monthly Adjustment Amount) thresholds.
After RMDs Begin – At this stage, large RMDs can push you into higher tax brackets. Early Roth conversions may help reduce this impact.
Mapping out a Roth conversion plan over multiple years ensures you're optimizing for the lowest lifetime tax liability. Also, an important part of a well-built retirement plan is creating a plan of action for if the unthinkable were to happen such as the premature death of a spouse or a long-term care event. While addressing these scenarios, Roth conversions can make sense to protect a plan from
As someone who loves to give, whether to my church, a family member, or a generous tip when out to eat, I love to help retirees maximize their giving. While many retirees donate cash to charity, there are more tax-efficient ways to give, depending on your situation:
Qualified Charitable Distributions (QCDs) – If you're over 70.5, you can donate directly from your pre-tax IRA tax-free. We help many retirees manage their giving as well as manage their Required Minimum Distributions (RMDs) through QCDs.
Donor-Advised Funds (DAFs) – These allow you to bunch charitable contributions in high-income years to maximize deductions. This works much differently than a QCD, for those who may have a private stock liquidation, investment home sale, or other large taxable event, DAFs can be extremely beneficial.
Appreciated Stock Donations – We often work with retirees who have individual stocks from a prior company or from their own trading. Many of those retirees are surprised that we can simply transfer stock from their brokerage account directly to their charity of choice! You get the realize the value of the stock today as a tax deduction, and you don’t have to worry about the gains you earned while holding the stock, eliminating tax today through the deduction and eliminating any capital gains tax you would have paid in the future if you were to sell the stock.
Being strategic with your giving ensures you maximize both your generosity and your tax savings!
Everyone knows that markets don’t only go up. Also, when you’re invested in a properly diversified portfolio, not everything moves in the same direction at the same time. Selling investments at a loss to offset future gains (or even ordinary income in some cases) can help manage taxable income. Also, many may not know that there is a 0% tax capital gains bracket! In low-income years it may make sense to sell investments and instantly rebuy them to increase your tax basis to avoid future taxes.
IRMAA (Income Related Monthly Adjustment Amount) is an additional surcharge on Medicare Part B and D premiums for high-income retirees. Since IRMAA thresholds are based on Modified Adjusted Gross Income (MAGI) from two years prior, strategic tax planning can help manage these costs. This trips a lot of retirees up when we are having a conversation discussing income from two years prior, or planning for two years ahead to avoid future IRMAA. Again, why thinking multi-year is important.
Aligning Your Tax Strategy with Your Retirement Vision
Retirement tax planning isn’t just about minimizing taxes—it’s about ensuring your wealth supports the life you’ve envisioned. Whether it’s through strategic Roth conversions, tax-efficient charitable giving, or managing Medicare costs, working with an advisor who prioritizes tax-smart distribution strategies can make a significant difference.
At Dunes Financial, we specialize in helping retirees align their financial plans with their values. If you want to ensure your tax strategy supports your long-term goals, let's talk.
Schedule a call today to create a tax-smart retirement income plan tailored to you.
Married Household - $8,000/year*
Single Household - $7,000/year*
$4,000 one-time fee*
Half paid upfront, remaining paid after plan presentation
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