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Category: Tax Planning

  • Taxes in Retirement: Which Benefits Are Taxable and Which Aren’t

    Taxes in Retirement: Which Benefits Are Taxable and Which Aren’t

    Because retirement income isn’t all taxed the same.

    Learn how Social Security, pensions, IRAs, Roth accounts, and other income sources are taxed plus find practical, tax-smart strategies to help you keep more of what you’ve earned.

    One of the most common questions I hear from people getting close to retirement is this:

    “Raman, are my retirement benefits going to be taxed?”  It’s a fair question. You’ve worked your whole life, saved carefully, and now you just want to know what’s actually yours to keep.

    But here’s the thing though,  not all retirement income is taxed the same way. Some sources are fully taxable, some are partially taxable, and some can be completely tax-free if you plan it right. And understanding which is which can make a massive difference in how long your money lasts,  and how much ends up with the IRS.

    Let’s look at Social Security Income First…

    Social Security is usually the first big surprise for retirees. A lot of people assume it’s tax-free, but that’s not always the case. Up to 85% of your Social Security benefits can be taxable depending on your total income. The IRS uses something called provisional income, which includes half of your Social Security benefits plus other income like pensions, IRA withdrawals, and investment income. If you’re a married couple with combined income over $44,000, chances are you’ll be paying taxes on 85% of those benefits.

    What you should look out for is how your withdrawals affect that calculation. The order in which you pull from your accounts directly impacts how much of your Social Security gets taxed. When it comes to my clients, I focus on coordinating withdrawals across account types so they can keep more of what they’ve earned. The difference between pulling from the wrong account first and structuring it strategically can easily mean thousands of dollars per year in additional taxes.

    And don’t forget the pension income, IRA withdrawals, and 401(k) distributions are almost always fully taxable at your ordinary income rate. That includes your required minimum distributions (RMDs) once you reach the mandated age.

    The SECURE 2.0 Act increased the RMD age to 73, and it’ll rise again to 75 in 2033. That gives you a few golden years to do proactive tax planning before RMDs start. One of the best moves you can make in that window is doing partial Roth conversions in your 60s while you still have flexibility.

    If you want to understand how that sequencing works, check out my article, Finding Your Safe Withdrawal Rate in Retirement. It explains how timing, taxes, and portfolio balance all work together to help you withdraw confidently without running out of money.

    Next up Is, Roth Conversions and the Power of Tax Flexibility

    When it comes to my clients, I run detailed Roth conversion analyses every year to find the “sweet spot” and then convert enough to lower future taxes but not so much that it triggers higher Medicare premiums or pushes them into a higher bracket today. If you’d like to see how those conversions really impact your retirement, read my article Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It). It walks through real examples of how coordinated Roth conversions and bracket management can save retirees six figures over time. 

    Now, Roth IRAs and Roth 401(k)s are easily the most flexible, tax-efficient accounts in retirement. Once the account has been open for five years and you’re over 59½, your withdrawals are completely tax-free. And, here’s the thing, Roth money doesn’t increase your taxable income, it doesn’t affect your Medicare premiums, and it doesn’t make more of your Social Security taxable. It’s your tax-free paycheck, and it gives you incredible flexibility when markets or tax laws change.

    And when I’m building retirement income plans, I use Roth accounts as a stabilizer. It’s the account you can pull from in high-tax years to keep your overall liability low.

    Then we have our Investment and Brokerage Accounts which are far too often overlooked. 

    So let’s talk about your regular brokerage or investment accounts. These accounts can be surprisingly tax-friendly when used strategically. Long-term capital gains and qualified dividends are usually taxed at lower rates — 0%, 15%, or 20%, depending on your income. Municipal bond interest can even be federally tax-free. 

    So what you should look out for is WHEN you sell. Without planning, you can accidentally trigger large capital gains, bumping your taxable income and increasing Medicare costs. With planning, though, you can use tax-loss harvesting and strategic rebalancing to manage gains and minimize surprises.

    And then don’t forget the other Income Sources That Can Sneak Up on You

    Annuities, HSAs, and part-time work can all affect your retirement tax picture in different ways. 

    Annuities, for example, depend on how they were funded. If you bought one with pre-tax dollars, your withdrawals are fully taxable. If you use after-tax money, only the earnings are taxed.

    For a deep dive into when annuities actually make sense, read my article Should I Consider an Annuity to Guarantee Retirement Income? I explain when they can genuinely provide peace of mind, and when the fees and tax implications outweigh the benefits.

    HSAs, on the other hand, are a triple threat in the best way: tax-free going in, tax-free growth, and tax-free withdrawals for qualified medical expenses. But if you pull money out for non-medical expenses before age 65, you’ll face taxes and a penalty. After 65, non-medical withdrawals are just taxed as ordinary income.  And if you plan to work part-time in retirement, keep in mind that those wages are fully taxable and can push more of your Social Security into the taxable range or increase your Medicare premiums.

    Lastly…

    Most retirees underestimate how much of their “retirement paycheck” goes to taxes. I see it all the time: great portfolios, disciplined savers, but no plan for how to spend their money efficiently. But here’s the thing, without coordination, retirees with over $2Million in Pre-Taxed Savings will end up overpaying through higher Medicare premiums, bracket jumps, or unnecessary taxation on Social Security. And when it comes to my clients, I focus on proactive tax planning by coordinating Social Security timing, withdrawal order, and Roth conversions, so they keep more of what they’ve earned. Taxes are one of the few big expenses you can actually control in retirement, and small adjustments today can mean tens or even hundreds of thousands saved over a lifetime.

    That’s exactly why I built Singh PWM as a flat-fee fiduciary firm. No commissions, no percentage of assets, just transparent advice built around your best interests. My goal is simple: to help you minimize taxes, avoid costly surprises, and enjoy a confident, stress-free retirement.

    Yes, many retirement benefits are taxable, but how much you pay depends entirely on timing, coordination, and planning ahead. The difference between guessing and having a clear, tax-smart plan can easily add up to high six figures over your lifetime. If you’d like to see exactly how much of your retirement income could be taxable and what strategies can help reduce it, schedule a Retirement Tax Clarity Call today.

    Raman Singh, CFP®

    Your Personalized CFO

    Related Reads from Singh PWM

    Important Disclosures

    The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind.

    This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material.

    Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses.

    Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted. Registration does not imply a certain level of skill or training.

  • The Silent Wealth Killer: How Inflation and Taxes Team Up Against Your Retirement Income

    The Silent Wealth Killer: How Inflation and Taxes Team Up Against Your Retirement Income


    So you’ve spent the last few decades working hard, saving diligently, and now find yourself with a few million dollars tucked away for retirement, first off, congratulations. You’ve done something that most people never achieve. But let’s be honest: the hard part isn’t building the nest egg. It’s protecting it from the quiet forces that slowly erode it over time.

    And the two biggest culprits? Inflation and taxes. You can’t see them, you can’t stop them, and together, they’re quietly working against your financial freedom every single year.

    A couple I recently worked with, Jim and Lisa, both 63, retired as an engineer, with no brokerage account. Between their 401(k)s, Roth IRAs, and savings, they had just over $2.3 million. On paper, they were in great shape.

    But as we started mapping out their income strategy, it became clear that their real concern wasn’t whether they had enough money; it was how much they’d actually get to keep after taxes and inflation.

    Even modest inflation of 3% cuts purchasing power in half over 24 years. That means a $100,000 lifestyle today would cost about $200,000 by the time they’re in their late 80s. Combine that with rising Medicare premiums, potential IRMAA surcharges, and how Social Security benefits get taxed once income crosses certain thresholds, and that $2.3 million starts to look a lot smaller.

    And here’s the kicker: the IRS doesn’t adjust your tax brackets fast enough to keep up with inflation.

    And Here’s The Double Whammy Most Retirees Don’t See Coming

    Every year, your groceries, travel, property taxes, and healthcare costs creep up, and if your withdrawals also increase to keep pace, you risk pushing yourself into higher tax brackets. That’s the double whammy: rising costs and rising taxes on the very withdrawals you need to survive.

    For retirees here in Arizona, this is even more pronounced. While the state doesn’t tax Social Security income, it does tax most other retirement income, including IRA withdrawals and capital gains. Add in federal taxes, and you could easily find yourself paying 20–30% of your annual retirement income back to Uncle Sam.

    According to the 2024 J.P. Morgan Retirement Guide, the average 65-year-old couple will need about $315,000 just for healthcare expenses during retirement. Add inflation and taxes on top, and the total lifetime cost of retirement can easily jump by half a million dollars or more.

    So What Can You Do About It?

    The most powerful defense isn’t chasing higher investment returns—it’s creating tax diversification and controlling the timing of your income.

    Most retirees I meet have the majority of their wealth tied up in pre-tax accounts like IRAs and 401(k)s. Those accounts come with a silent partner: the IRS. Every time you take a withdrawal, you’re triggering taxable income. And once you hit age 73, Required Minimum Distributions (RMDs) force you to take money out whether you need it or not.

    That’s where smart tax planning BEFORE RMDs begin…makes all the difference.

    In Jim and Lisa’s case, we are going to front load Roth conversions between ages 63 and 73, strategically filling up lower tax brackets before RMDs kick in. We forward tested and ran the numbers for this approach. This strategy is going to preserve 22% more real after-tax income over their retirement and keep them below key Medicare and Social Security tax thresholds.

    That’s not investment magic. That’s tax strategy.

    The Real Reason Why Timing Matters More Than Returns Is Because

    You can’t control the markets, but you can control your tax exposure.

    Timing withdrawals and conversions can often add more value than an extra 1% in annual returns. Think about it…if you earn 8% on your portfolio but pay 30% in taxes, your net growth is 5.6%. But if you earn 7% and pay just 15% in taxes, you’re ahead.

    Most retirees spend decades accumulating without a clear distribution plan. But distribution planning is when to take income, from which account, and in what order which is the true engine of a sustainable retirement.

    And this is where working with a flat-fee fiduciary advisor really matters. When your advisor isn’t charging 1% of your portfolio every year, they can focus entirely on optimizing your lifetime after-tax income rather than trying to “grow AUM.” It’s about protecting your wealth, not just managing it.

    At the end of the day, you don’t retire to watch spreadsheets. You retire to live, to travel, spend time with grandkids, or enjoy a glass of wine on your beautiful Arizona patio at sunset.

    But if inflation continues to run at even 3%, the same $10,000 monthly lifestyle today could cost $18,000 in 20 years. Without proactive planning, that shortfall has to come from somewhere, and it usually comes from your future self.

    That’s why every retiree needs to think in terms of after-tax, inflation-adjusted income, not just returns on paper.

    Because if your plan doesn’t account for inflation and taxes working together, it’s like rowing against the current. You’re still moving forward, but much slower than you think.

    As I wrote in my articles Finding Your Safe Withdrawal Rate in Retirement and Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It), the goal of retirement planning isn’t to avoid taxes—it’s to control them. The retirees who win this game are the ones who plan proactively, not reactively.

    You’ve already done the hard part by saving and investing wisely. Protecting your wealth now means being intentional about how and when you take income.

    If you’re retired or approaching retirement here in Phoenix, Scottsdale, Paradise Valley, or Tucson, and wondering whether your plan is as tax-efficient as it could be, I’d be happy to help you find out.

    After all, your money should be working as hard for you in retirement as you did earning it.

    Schedule your complimentary retirement tax review and let’s make sure inflation and taxes aren’t quietly eating away at the wealth you’ve worked a lifetime to build.

    Raman Singh, CFP®

    Your Personalized CFO

    Important Disclosures

    The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind.

    This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material.

    Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses.

    Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted.

    Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.

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     The Silent Wealth Killer: How Inflation and Taxes Team Up Against Your Retirement Income | Singh PWM – Flat-Fee Fiduciary in Arizona

    Meta description:
     Learn how inflation and taxes can silently erode your retirement income—and what you can do to protect your purchasing power. Discover Roth conversion, withdrawal timing, and tax-efficient strategies from Arizona’s flat-fee fiduciary advisor.

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     retirement income inflation, tax-efficient retirement income, flat-fee fiduciary Arizona, inflation-adjusted withdrawals, retirement tax planner Phoenix, Scottsdale, Tucson

  • Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It)

    Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It)

    Why Most Retirement Plans Miss the Mark

    Retirement planning is one of the biggest financial steps you’ll ever take. But here’s what I see far too often when I review new clients’ plans: the investments are there, but the tax strategy is missing. And that gap can be costly, sometimes in the high six figures over the course of a retirement.

    The truth is, retirees overpay in both fees and taxes, not because they picked the wrong investments, but because their advisor never built taxes into the plan. That’s like building a house without considering plumbing. It might look fine at first, but sooner or later, you’ll be dealing with a very expensive problem.

    Understanding the Different Types of Advisors

    Now, let’s clear up one thing that causes a lot of confusion. The financial industry loves titles like financial advisor, wealth manager, or retirement consultant. What really matters is how that person gets paid.

    Commission-based advisors make money selling products like annuities or insurance. Variable annuities, for example, often carry stacked ongoing fees that can easily amount to 2%–3% per year (M&E charges alone often around 1.25%) plus potential surrender charges, costs that directly reduce returns.

    If you’re considering an annuity or wondering whether it makes sense to guarantee part of your retirement income, I’ve broken down the pros, cons, and fiduciary perspective in my related article: Should I Consider an Annuity to Guarantee Retirement Income?. It explains when annuities can provide genuine peace of mind — and when the hidden costs can outweigh the benefits.

    Then you have percentage-based advisors who charge around 1% of assets under management, still the dominant model in the industry according to MarketWatch and Barron’s. On a $2 million portfolio, that’s $20,000 every year, regardless of market performance. Over twenty years, that adds up to more than half a million dollars, money that could have been compounding for you instead of covering someone else’s business model.

    Oh, you also have the Fee-Based advisors who are not only charging you % of assets under management but also selling you commissioned based products.

    But here’s the thing, Flat-fee fiduciary advisors work differently. They charge one transparent fee, with no commissions, no sliding percentages, and no hidden incentives. Their advice is tied to your best interests, not to sales contests or the size of your portfolio.

    At Singh PWM, my approach is simple: one flat annual fee that includes everything like investment management, tax planning, withdrawal strategies, and estate coordination. That alignment ensures every decision serves you, not your advisor’s compensation model.

    Why Tax Planning Matters More Than Ever

    So why does tax planning matter so much? Because taxes are often your single biggest controllable expense in retirement. And unfortunately, most plans don’t integrate them properly, and that’s where tons of money is left on the table.

    You see, smart tax planning isn’t just about filing returns or doing Roth conversions. It’s about structuring your income, withdrawals, and investments in a way that maximizes what you keep. And If you’re wondering how much you can safely withdraw each year without running out of money, check out my related article: Finding Your Safe Withdrawal Rate in Retirement. It explains how portfolio size, taxes, and market conditions interact to determine a sustainable income strategy—and why the old “4% rule” may no longer apply.

     

    Vanguard’s research on “Advisor’s Alpha” shows that the value of skilled financial advice, including tax-efficient withdrawal sequencing, can add roughly 3% in net returns over time. Even Morningstar and other research groups have echoed this finding, showing that a coordinated withdrawal plan across taxable, tax-deferred, and Roth accounts can meaningfully extend portfolio longevity and reduce lifetime taxes.

    Hidden Tax Traps in Retirement

    Take Social Security, for example. Many people don’t realize that up to 85% of Social Security benefits can become taxable depending on total income. Combine that with distributions from IRAs or capital gains, and suddenly your “safe” retirement income can trigger higher taxes and even push you into an unexpected Medicare bracket.

    Speaking of Medicare, those brackets, known as IRMAA or income-related monthly adjustment amounts, can be brutal if you’re not proactive. For 2025, the standard Part B premium is $185 per month, but higher-income retirees can face surcharges that add hundreds of dollars per month per person. I’ve seen cases where one poorly timed IRA withdrawal or Roth conversion triggered an IRMAA surcharge lasting an entire year.

    The SECURE 2.0 Act brought new opportunities and new traps. It raised the required minimum distribution (RMD) age to 73, giving some retirees extra time to perform Roth conversions in lower tax brackets before mandatory withdrawals begin. But it also reinforced the 10-year rule for inherited IRAs, which forces non-spouse beneficiaries to deplete their inherited retirement accounts within a decade. And without proper planning, that can create a steep, “bigly” tax bill on your family.

    And then there’s the 2026 tax cliff. A lot of the provisions of the 2017 Tax Cuts and Jobs Act are set to expire after December 31, 2025. That means higher marginal rates for many households and less room to maneuver on conversions and income strategies. Acting now can help lock in today’s lower brackets before they disappear.

    Real-Life Consequences of Delayed Tax Planning

    I’ve seen what happens when people wait too long to think about taxes. One couple had $3 million and waited until RMD age to consider Roth conversions and their window to convert in lower brackets got smaller and smaller. The result was paying hundreds of thousands more in taxes than they needed to pay over their lifetime. Another client drew from IRAs first instead of taxable accounts. That decision pushed their income just high enough to trigger a Medicare premium jump that cost them an extra $2,100 year. Mistakes like this don’t look dramatic at first, but over a decade or two, the costs compound. And once you’ve missed the opportunity, you can’t go back and undo it.

    This is why flat-fee fiduciary planning works so well. The model aligns retirement and tax strategy without conflicts of interest. At Singh PWMSingh PWM, my approach is simple: one flat annual fee, integrated planning that connects investments, taxes, estate, and cash flow. Every plan includes proactive tax strategies such as Roth conversions, withdrawal sequencing, RMD planning, and tax-loss harvesting, all built on a fiduciary standard that puts your interests first.

    The payoff is big. On a $2 million portfolio, the gap between a 1% AUM advisor and a flat-fee model can be roughly $440,000 over 20 years. Add in tax-smart moves like bracket management, avoiding IRMAA cliffs, and estate structuring, and you can easily save another six figures over your lifetime. Meanwhile, fund costs themselves have fallen dramatically. The asset-weighted average fund fee across U.S. mutual funds and ETFs is now about 0.34%, according to Morningstar, which means the biggest savings opportunities today often come from outside the portfolio through better fee and tax management.

    And timing really matters. If you’re in your 50s or 60s, every year you delay closing tax gaps, your window narrows. Once RMDs start, once you’ve filed for Social Security, or once your estate documents are finalized, your flexibility is gone. Acting now means you can convert at today’s tax rates before they sunset in 2026, manage Medicare surcharges proactively, and set up your legacy to pass down more efficiently under the SECURE Act rules.

    At the end of the day, retirement planning isn’t just about investments. It’s about after-tax income and the legacy you leave behind. Working with a flat-fee fiduciary who builds taxes into every step means you keep more of your money and reduce uncertainty about your future.

    Important Disclosures

    The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind. This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses. Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted. Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.