Tax Strategies Before Retirement
The five-to-ten years before retirement are your highest-leverage tax planning window. Here is how to use them.
Most people think of tax planning as something that happens in April. The retirees who keep the most of what they have earned think of it as something that happens in the five to ten years before they stop working.
Three levers matter most in this window. The first is asset location — making sure the right kind of investments live in the right kind of account. Tax-inefficient holdings belong in IRAs and 401(k)s. Tax-efficient growth belongs in brokerage accounts where long-term capital gains rates apply.
The second is bracket management. As earned income winds down, you gain control over your taxable income for the first time in decades. That control is what makes Roth conversions, capital gain harvesting, and Qualified Charitable Distributions powerful — but only if you plan them together, not in isolation.
The third is timing around Social Security and Medicare. Income above certain thresholds pushes more of your Social Security into taxable territory and raises your Medicare Part B and D premiums through IRMAA. A withdrawal sequence that ignores those cliffs can quietly cost a couple thousands of dollars a year.
The goal is not to pay zero tax. It is to pay tax in the lowest brackets you will ever be in, on your terms, in the years you choose.
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