The 3 Phases of Retirement Taxes™
Most retirees plan as if retirement is one long, smooth tax phase. It isn't. Retirement is three distinct tax phases, each with its own opportunities and its own dangers. Knowing where you are determines what to do next.
6 min read
Why three phases, not one
The federal tax code treats different retirement ages very differently. Earned income fades, Social Security kicks in, Medicare arrives, RMDs begin, beneficiary rules apply — and each transition changes the optimal strategy. Treating all of retirement as "the same" is one of the most expensive mistakes pre-retirees make.
Roughly ages 60–72
Phase 1 — The Conversion Window
Design the next 30 years of taxes
- Earned income drops; tax bracket usually lowest in decades.
- RMDs haven't started — you fully control taxable income.
- Best time to execute multi-year Roth conversion strategy.
- Best time to flush capital gains at 0% / 15% rates.
- Best time to set up tax-efficient legacy structure.
Age 73 onward
Phase 2 — The RMD Years
Manage the income you no longer fully control
- IRS forces taxable withdrawals from pre-tax accounts.
- Social Security taxation usually maximizes (up to 85% taxable).
- Medicare IRMAA surcharges become a recurring planning variable.
- Roth conversions become much more expensive — but QCDs become available.
- Withdrawal sequencing across buckets matters most here.
Final decade and after death
Phase 3 — The Legacy Phase
Decide who receives what — and at what tax cost
- SECURE Act forces non-spouse heirs to drain inherited IRAs within 10 years.
- Surviving spouse faces compressed single-filer brackets (Tax Widow Bomb™).
- Roth dollars pass tax-free; pre-tax dollars pass as a future tax bill.
- Charitable strategies (QCDs, donor-advised funds, CRTs) can dramatically shift outcomes.
- Beneficiary structure can save heirs six figures with no change in net worth.
The Tax Liability Grade™
Your Tax Liability Grade™ is a simple way to see, at a glance, how much of your retirement is exposed across all three phases combined. It blends your Tax Bomb Score (forced future income) with your Legacy Score (how much tax passes to heirs).
Run the free analysis to see your own grade — and where the biggest opportunities sit across the three phases.
Soft next step
Run the free analysis and see how these concepts apply to your own numbers.
Review Your Retirement Tax Exposure