The IRS doesn’t care that you’ve planned to spend retirement on South Beach. In retirement, you’ll still be filing taxes every April, but tax planning should be a year-round exercise. Because when you retire… well, things get complicated.
Withdrawal strategies, IRA conversions, medicare surcharges; if you’re in over your head and feel overwhelmed, you’re not alone. Here are the three mistakes we at Fontaine Retirement Group see retirees make.
1. Only Thinking About Taxes in April
Taxes don’t take a back seat just because you’ve stepped away from work.
If you’re waiting until tax season to figure it out, the reality is that by then, much of the tax bill is already determined, and it’s often higher than it needs to be.
In retirement, you are replacing a paycheck, but it’s also important how that paycheck is structured. Pulling income from different accounts without a strategy can create unnecessary tax exposure year after year.
The upside is that it doesn’t have to feel overwhelming or stressful. With the right approach, you can be intentional about where your income comes from, how it’s taxed, and how it fits into your bigger financial picture.
2. Treating Different Accounts the Same
Transitioning into retirement, one of the biggest shifts isn’t how much you’re withdrawing, but where you’re withdrawing from.
Many retirees are surprised to learn that not all dollars are created equal. Pulling from one account can increase your tax bill, while pulling from another might not impact it at all. Without a clear strategy, it’s easy to unintentionally push yourself into a higher tax bracket or trigger additional costs like Medicare surcharges.
A good place to start is understanding how each type of account is treated:
Traditional (Regular) IRAs: These accounts are funded with pre-tax dollars, which means withdrawals are taxed as ordinary income.
The more you withdraw, the higher your taxable income.
Larger withdrawals can push you into a higher tax bracket.
They can also increase your Medicare premiums (IRMAA surcharges).
Taxable Brokerage Accounts: These accounts are more flexible from a tax perspective, but still require careful planning.
Long-term capital gains are typically taxed at 0%, 15%, or 20%, depending on your income.
Short-term gains are taxed at your ordinary income rate.
Strategic selling can help manage your overall tax exposure.
Roth IRAs: These accounts are often the most powerful tool in retirement tax planning.
Contributions were already taxed up front.
Qualified withdrawals are completely tax-free.
They can be used strategically to avoid pushing yourself into a higher tax bracket.
The key is knowing these rules and using them together. A thoughtful withdrawal strategy can give you more control over your taxable income year by year, helping you navigate retirement with greater flexibility and fewer surprises.
3. Not Properly Timing Withdrawals
Once you understand how each account is taxed, the next question naturally becomes: Which one should you use first?
This is where retirement income planning becomes more of a strategy than a simple rule. There isn’t a one-size-fits-all order because your ideal approach depends on your income needs, tax situation, and timing.
That said, there are a few guiding principles that can help you stay intentional rather than reactive:
Be mindful of your tax bracket each year: Instead of taking large, sporadic withdrawals, aim to spread income out in a way that keeps you in a lower tax bracket.
This can also help limit increases in Medicare premiums.
Small adjustments year to year can make a meaningful difference over time.
Avoid large spikes in income: Big withdrawals might solve a short-term need, but can create long-term tax consequences.
Higher income can trigger higher tax rates.
It may also increase the amount of your Social Security that is taxed.
Gradually reduce tax-deferred accounts: Waiting until required minimum distributions (RMDs) begin can leave you with fewer options.
Proactively drawing down these accounts earlier can help smooth out your tax picture.
It may reduce the risk of being pushed into higher brackets later in retirement.
Look for opportunities to convert to Roth: Lower-income years, like early retirement or between career transitions, can be valuable.
Converting during these periods can reduce future RMDs.
It also builds a source of tax-free income for later years.
The difference often comes down to timing. A reactive approach (such as taking income only when needed) can lead to unnecessary taxes. A proactive strategy, on the other hand, allows you to shape your income year by year, creating more flexibility and efficiency throughout retirement.
Ready to take control of your retirement tax strategy?
At Fontaine Retirement Group, we specialize in helping retirees like you navigate the complexities of tax planning, from managing withdrawals to strategically using Roth conversions. Don’t wait until April; start planning today and avoid costly mistakes that could derail your retirement plans.
Let’s work together to build a strategy that can lower your taxes, keep your income flexible, and your retirement on track. Schedule a free consultation with us today and take the first step toward a more tax-efficient retirement.
To get in touch, schedule an initial meeting here.
Frequently Asked Questions
When should I start planning for taxes in retirement?
Tax planning in retirement should be a year-round process, not something you only think about during tax season. By the time you file your return, most of your tax liability has already been determined. Reviewing your income, withdrawals, and potential strategies throughout the year can help you make more informed decisions and avoid unnecessary surprises.
Which accounts should I withdraw from first in retirement?
The answer depends on your income needs, tax bracket, and long-term goals. In many cases, a coordinated strategy that pulls from taxable, tax-deferred, and tax-free accounts can help manage your overall tax exposure. The key is to be intentional rather than withdrawing funds without a plan.
How can I reduce taxes on my retirement income?
There are several strategies that may help, including managing how much you withdraw each year, staying within certain tax brackets, and using tools like Roth conversions during lower-income years. Thoughtful planning can help reduce the impact of taxes over time and give you more flexibility in how you generate income.
About David
Financial Planner & Founder
David Fontaine, CFP®, is the founder of Fontaine Retirement Group in Miami, specializing in a coordinated, long-term approach to retirement income, tax-aware planning, and estate coordination. A veteran financial educator and author, he focuses on simplifying complexity and guiding pre-retirees through the transition into retirement with a client-first philosophy. Outside of his direct advisory work, David leads educational workshops in South Florida to empower clients with the clarity needed for confident, thoughtful decision-making.
5730 SW 74th Street, Suite 800, South Miami, FL 33143 | 305.386.7667 | www.fontaine-retirement.com | david@frgemail.com
Securities and investment advisory services offered through Osaic Wealth, Inc. member FINRA/SIPC. Osaic Wealth is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth.