Featuring a 45-Minute Educational Video with Chase Tushaus
Before you dive in: If you're nearing retirement and wondering how taxes may shape your financial future, consider booking a complimentary intro call with Tushaus Wealth Management.
Approaching retirement is like making your way down Mount Everest — and as Chase likes to say, most accidents happen on the descent, not the climb. After decades of saving and investing, the journey changes once you begin using your assets for income. And one of the biggest forces shaping that journey?
Taxes.
In fact, retirement tax planning is one of the most overlooked components of financial planning — especially for families in San Diego, Scottsdale, and other high-cost areas where income needs can be significant. Many retirees assume their taxes will naturally decrease in retirement. Unfortunately, that’s not always how the numbers play out.
We’ll explore the importance of tax diversification, how shifts in national debt and tax policy may affect your retirement, and practical strategies you may want to consider as you prepare for life’s next chapter.
Long-term financial planning isn’t just about investments. Chase walks through six fundamental components that work together to shape your retirement income:
People are living longer, and retirement could last 25 to 35+ years. Longer life spans may increase costs like healthcare and long-term care.
Your ability to access funds when needed, planned or unplanned, matters. A tax strategy influences how efficiently you can tap different accounts.
A dollar today won’t be worth the same 20 years from now. Inflation can quietly reduce your purchasing power if your strategy doesn’t account for it.
Market swings can affect retirees more significantly, especially when taking withdrawals. Protecting what you’ve built while still allowing growth takes careful planning.
The passing of a spouse often brings complex financial changes, including a shift from joint filing to single filing, which may increase your tax bracket even with similar income.
Tax rates today may not be the tax rates you’ll face later. Understanding your exposure, especially with tax-deferred accounts, is crucial.
Each piece affects the others, which is why a tax plan alone isn’t enough. True planning involves tax preparation + tax management + financial planning + investment management, all working together.
Tax risk is the possibility that rising future tax rates reduce your retirement income. Chase illustrates this with a simple analogy:
If a bank offered you a 30-year mortgage but refused to disclose the interest rate until the end, would you take it?
Probably not.
Yet each time someone contributes to a tax-deferred account (401(k), IRA, 403(b), etc.), this is essentially what they’re agreeing to: You get a tax break now, but you won’t know the tax rate when you withdraw it.
That uncertainty is the core of tax risk.
The U.S. national debt is approaching $40 trillion. Historically, when debt exceeds GDP, governments have two options:
Given current trends, many economists believe that future tax rates may rise over time. Chase highlights:
This is why many retirees choose to explore strategies that may help control taxes before rates potentially increase.
To build a tax-diversified retirement plan, you must understand the three tax buckets:
Income taxed in the year you receive it:
Traditional retirement accounts:
Taxes are paid when funds are withdrawn, and Required Minimum Distributions (RMDs) eventually force taxable income whether you need it or not.
Accounts with tax-free withdrawals:
This bucket may give retirees flexibility to limit taxable income in high-income years.
If all your money sits in the tax-later bucket, you’re exposed to:
Tax diversification means allocating resources across all three buckets, giving you the flexibility to pull income strategically based on tax conditions.
This flexibility may help:
As Chase notes, a growing traditional IRA increases the potential future tax liability — one of the few assets where your liability may grow as the asset grows, think back to our mortgage analogy.
This is why some retirees explore whether it may be beneficial to gradually shift taxable assets into the tax-free bucket (Roth IRA).
A Roth conversion moves money from a traditional IRA to a Roth IRA, creating tax-free growth going forward.
Systematically converting funds means you may shift more future growth into the tax-free bucket without increasing the current year’s tax rates higher than what you otherwise might pay in future years.
As Chase notes, every situation requires personalized analysis, so timing and execution vary.
For retirees already taking RMDs, charitable strategies may help manage taxable income:
Send RMD dollars directly to charity, which would prevent that RMD amount from being included in taxable income for that year.
For years with unusually high income (selling a business, capital gains, etc.), a donor-advised fund allows you to make a larger gift in one year while donating to charities at a later time. You have the ability to utilize the charitable tax benefits in the current year.
These strategies may help manage taxes while supporting meaningful causes.
With rentals, we eventually grow tired of:
But selling a rental can often create a large capital gain.
A potential option is a DST (Delaware Statutory Trust) through a 1031 exchange, which allows you to:
DSTs are not suitable for everyone, so proper evaluation is important.
Medicare premiums can increase sharply if income goes even $1 above certain thresholds.
And the income used for these thresholds is from two years prior, making planning essential.
(Summarized for educational purposes)
This resulted in meaningful projected lifetime tax savings.
Tax planning isn't a once-a-year exercise. Many tax preparers focus on the spring or October rush. Many financial advisors focus primarily on investments.
That leaves a gap — a space where important tax planning conversations may fall through the cracks.
Tushaus Wealth Management aims to bridge both sides through the Wealth Defender Process, which helps identify:
The goal is to bring clarity to your overall retirement picture.
Tax diversification won’t eliminate taxes, but it may help you control when and how you pay them. And in a world of rising national debt, potential tax increases, and complex retirement rules, the ability to manage your taxable income may be more valuable than ever.
Every retiree’s path down the mountain is unique. What matters most is having a clear map, and a guide to help lead the way.
Get one-on-one guidance tailored to your goals — from tax planning & preparation to investment management, financial planning, and estate planning & documentation — we cover the bases when it comes to wealth management. We offer a free 15-minute intro call to get to know you and your needs. You can book yours now on our Book a Call page.
Yes, a majority of our advisors are licensed as Enrolled Agents with the IRS, the highest credential the IRS awards. Ref: https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agent-information
Tax planning is the legal and proactive analysis of your financial situation to arrange your affairs in a way that minimizes your tax liability and maximizes wealth. Through advanced tax planning, one can not only project what their tax rate might be in the future, but also do something to make sure they are paying taxes at the lowest rate possible.
Tax diversification involves spreading assets across tax-now, tax-later, and tax-free accounts to give retirees more control over taxable income.
We believe there are six fundamental planning considerations when it comes to your taxes:
Planning with all of these in mind will help create a well-rounded tax strategy for retirement.
Choosing a tax planning service can be difficult especially because not everyone offers a full wealth management service. Tax planning involves a variety of different strategies, and each individual should have their own personal plan according to their unique situation.
At Tushaus Wealth Management, we understand the complications of taxes, and we pride ourselves in offering a full-spectrum wealth management service, covering the following areas:
Not necessarily. They can be helpful in some situations, but timing and tax brackets matter. A personalized analysis may help determine whether they fit your strategy.
Higher future tax rates may increase the taxable income from traditional IRAs or 401(k)s. Planning ahead may help manage this risk.
Many retirees begin planning years in advance to help manage taxable income and avoid Medicare IRMAA surcharges.
The tax strategies discussed in this article are for educational purposes only and are not offered as advice.