Her Cheapest Tax Year Was Hiding in Plain Sight

You've saved well. The accounts are healthy. But you keep hearing the same warning. When the pension kicks in, then Social Security, then RMDs, your taxes don't go down in retirement. They explode. It's the kind of thing that makes smart people stare at their statements and feel a quiet dread about the future.

Meet Margaret, 58 and Loving Her Job

Margaret is single, 58, and recently shifted to part-time. She kept full benefits but took a real cut in salary. Financially, she could retire tomorrow. She just doesn't want to. The work gives her structure, purpose, and people she actually likes seeing every week.

The "Wait Until Retirement" Trap

Most people Margaret's age get told the same thing. Wait until you're fully retired to do anything fancy with taxes. That's when your income drops. For most people, that's true. For Margaret, it was the opposite.

Thinking her tax bill would shrink at 65 was like watching a wave build offshore and assuming the tide was going out. Her pension starts at retirement. Her deferred comp pays out over 10 years on top of it. Then Social Security stacks in. Then RMDs from her IRA force withdrawals she doesn't even need. All at single-filer rates. The lowest tax year of her life wasn't coming. It was already here.

A Window, Not a Waiting Room

The shift was simple. Use the window while she has it. We started Roth conversions to move money out of her IRA at today's lower brackets. We harvested long-term capital gains while they could still be taxed gently. We filled up the favorable brackets on purpose, every year, before Medicare surcharges become a factor.

The principle behind it: taxes paid on your terms today are almost always cheaper than taxes paid on the IRS's terms tomorrow. Especially for a single filer staring down a stacked-income retirement.

A Quieter Relationship With the Future

The real win has been how Margaret feels. She still loves her part-time work. But the cloud that used to sit over her future, the tax torpedo she'd read about, the RMDs she dreaded, is gone.

She's not fighting the wave anymore. She's getting ahead of it, one calm year at a time. Her retirement income will look exactly the same. The taxes she'll pay on it won't.

The Question Worth Sitting With

Conventional wisdom says don't touch advanced tax planning while you're still working. For most people, that's right. But for some, especially single filers with a pension, deferred comp, or a sizable IRA waiting in the wings, the working years are the planning years.

Before you assume your lowest tax bracket is somewhere out in the future, it's worth asking whether it's actually right now.

Thank you for reading!

Last thing – I read every single reply to these emails.

I use these responses to guide my content, so your question might become next week's deep dive.

Happy retiring,

Josh Rendler, CFP® Founder, Motion Retirement Partner, Award-Winning Retirement Firm