Will My Retirement Savings Last? And What About Taxes?

Will My Retirement Savings Last?

If you’ve ever found yourself asking questions like, “Will my retirement savings last?” or “How do I avoid getting crushed by taxes in retirement?” you’re not alone. These aren’t just financial questions—they shape how secure and comfortable life feels after work. And while budgeting and investment returns matter, your long-term outlook depends just as much on how you handle taxes in retirement. Let’s look at a couple who got it right. Luke and Shannon had done everything by the book. They were retired, financially stable, and enjoying life. But like many people with large pre-tax IRA balances, they were quietly worried about the tax bomb lurking down the road. The issue wasn’t about running out of money. It was about how much of that money they’d eventually lose to taxes. By planning and converting parts of their traditional IRAs into Roth IRAs during years when their income was low, they cut their future tax bill by nearly $350,000. How? By paying taxes now at lower rates and avoiding larger tax hits later when required minimum distributions (RMDs) would force income onto their tax return, whether they needed the money or not. And the best part—they didn’t have to tighten their belts or scale back their lifestyle. They still spent around $6,000 a month, stayed active, and enjoyed the retirement they’d planned for. Let’s look at how they pulled it off. Where Luke and Shannon Started At 65 and 64, Luke and Shannon had built a strong financial foundation. Shannon had a $1 million IRA, and Luke had about $825,000. Together, they held another $600,000 in taxable investment accounts and owned a $1.7 million home outright. Not bad by any standard. However, most of their money was invested in tax-deferred accounts—IRAs that would eventually require forced withdrawals. RMDs aren’t optional, and they start at age 73. When that time comes, retirees like Luke and Shannon could see their taxable income spike even if their spending doesn’t change. They weren’t living large. Their hobbies were low-cost. They liked the outdoors, volleyball, and pickleball. But even a modest lifestyle doesn’t protect you from the tax man when the IRS starts demanding distributions from your retirement savings accounts.

The Income Gap That Created Opportunity

Luke had a small monthly pension, just $600. The real difference-maker was that they planned to delay taking Social Security until age 70. That decision resulted in a few lower-income years, which advisors sometimes refer to as “the retirement gap.” During this window, their taxable income was low, which opened the door to strategic Roth conversions.

The Problem With Large IRA Balances

Large IRA balances appear to be a win. However, once RMDs become applicable, those duplicate accounts can create tax headaches. The IRS doesn’t care if you need the money or not—they’ll force withdrawals and tax them like ordinary income. Even if Luke and Shannon stuck to their $6,000 monthly budget, RMDs could flood them with extra taxable income, pushing them into higher brackets. They saw the trap early and chose to act.

How They Avoided the Tax Bomb

The strategy wasn’t complicated. They converted pieces of their IRAs to Roth IRAs while their income was low, before Social Security and larger investment income hit their tax return. They ran the numbers across several options. One scenario kept conversions within the 10% tax bracket. Another used the 12% bracket. The most aggressive plan maxed out the 22% bracket. That last option saved them the most—an estimated $350,000 over the course of their retirement. They didn’t just look at tax brackets, though. They also considered other impacts, such as Medicare premium thresholds and potential state tax consequences. A well-timed Roth conversion can save money, but poor timing can trigger hidden costs. By keeping the bigger picture in view, they avoided those pitfalls and secured long-term savings.

What Happened as a Result

The payoff was more than just financial; it was also emotional. They shifted over half of their portfolio into tax-free Roth IRAs. Their future RMDs shrank, and their taxable income stayed manageable. They bought peace of mind and flexibility, and they never had to change how they lived. They also insulated themselves from future tax hikes. If Congress raises rates later, they will already be ahead of the game.

Lessons You Can Use

You don’t need to be a millionaire to take advantage of this strategy. But you do need to understand a few key principles.

• First, timing matters. Converting when your income is low—usually before Social Security and RMDs kick in—can lock in lower rates.
• Second, think beyond the brackets. Watch for things like Medicare premium hikes, Social Security taxation, and the ripple effects on your overall plan.
• Third, it pays to be patient. Significant savings can be achieved through years of consistent, disciplined planning. This isn’t about finding a one-time trick. It’s about building a long-term tax strategy that fits your life.

Take Control Before It’s Too Late

Don’t wait until RMDs start forcing money into your income. Your best opportunity might be the years before those rules apply. By planning, as Luke and Shannon did, you can reduce your tax burden, increase flexibility in your income, and protect a greater portion of your hard-earned savings. If you want to dig deeper into strategies like Roth conversions, we’ve created a free email course called the Secure Retirement Savings Blueprint. It walks through the steps to help you build a retirement that’s built on thoughtful planning, not luck. You’ve worked hard for your money. Now it’s time to ensure taxes don’t exceed their fair share.