Most people spend decades focusing on saving for retirement. Very few spend equal time thinking about the taxes they’ll pay in retirement. That’s a costly oversight — because for many retirees, taxes are their single largest controllable expense.
The good news is that with the right strategies, retirement taxes are highly manageable. The bad news is that the window to act is often shorter than people realize.
Mistake #1: Not Planning for Required Minimum Distributions
Once you reach age 73, the IRS requires you to start withdrawing a minimum amount from your traditional IRA and 401(k) accounts each year. These Required Minimum Distributions (RMDs) are taxable as ordinary income — and for people with substantial retirement savings, they can push you into a higher tax bracket, increase your Medicare premiums, and cause more of your Social Security to become taxable.
The mistake isn’t taking RMDs — you have no choice. The mistake is not planning for them earlier. The years between retirement and age 73 are often a golden window to do Roth conversions at lower tax rates, reducing the size of your traditional accounts and therefore your future RMD burden.
Mistake #2: Not Knowing How Much of Your Social Security Is Taxable
Many retirees are genuinely surprised to learn that Social Security benefits can be taxable. Depending on your “combined income” — which includes your adjusted gross income, non-taxable interest, and half of your Social Security benefits — up to 85% of your Social Security can be subject to federal income tax.
The thresholds that trigger Social Security taxation have not been adjusted for inflation since 1983, which means a growing percentage of retirees pay taxes on their benefits every year. Understanding where you fall relative to these thresholds can inform decisions about when to take IRA withdrawals, when to do Roth conversions, and how to sequence your income sources.
Mistake #3: Ignoring the Roth Conversion Window
A Roth IRA grows tax-free and has no Required Minimum Distributions. Converting money from a traditional IRA to a Roth IRA means paying taxes now in exchange for tax-free income later.
For retirees who are no longer working but haven’t yet started Social Security or RMDs, there’s often a period of relatively low taxable income — a window where Roth conversions can be done at a lower tax rate than you paid while working or will pay once RMDs begin. Many financial advisors consider this one of the most underutilized strategies available to retirees.
Mistake #4: Missing Deductions and Credits Specific to Seniors
The tax code contains several provisions specifically for older Americans that many people overlook. The additional standard deduction for taxpayers 65 and older, the Credit for the Elderly and Disabled, medical expense deductions (which become more accessible once you’re on Medicare), and the ability to make qualified charitable distributions directly from an IRA to reduce your taxable income are all strategies worth knowing.
Mistake #5: Treating All Retirement Income as Equal
Different sources of retirement income are taxed very differently. Social Security may be partially taxable. Traditional IRA and 401(k) withdrawals are fully taxable. Roth IRA withdrawals are tax-free. Dividends and capital gains may be taxed at lower rates than ordinary income. The order in which you draw from these accounts — and the amounts you draw — can significantly affect your annual tax bill.
This is called “income sequencing” and it’s one of the areas where thoughtful planning pays the most dividends.
The Bottom Line
Retirement tax planning isn’t a one-time event — it’s an ongoing process that ideally begins several years before you stop working. The strategies available to you narrow as you age, which is why understanding the landscape early matters.
For a complete guide to the tax traps retirees most commonly fall into — including RMD strategies, Roth conversion timing, Social Security taxation thresholds, and the deductions most people miss — see our Tax Traps Retirees Fall Into — 2026 Edition.
👉 Get the Tax Traps Guide 2026 — $5
Senior Life Guides publishes plain-English retirement guidance for real people. Our guides are updated annually and written to help seniors and their families make confident decisions. Visit seniorlifeguides.org for free tools and resources.