Taxes in retirement: keep more of what you’ve saved.
How pensions, Social Security, IRAs and savings are taxed, the order to draw from your accounts, and the mistakes that quietly cost retirees money.
Every income source is taxed differently.
The mix of accounts you draw from each year decides your tax bill. Here’s how the common sources are generally treated.
| Income source | Bucket | How it’s generally taxed |
|---|---|---|
| Pensions | Tax-deferred | Taxed as ordinary income |
| Social Security | Partly taxable | Up to 85% may be taxable, depending on your other income |
| 401(k) / 403(b) | Tax-deferred | Withdrawals taxed as ordinary income |
| Traditional IRA | Tax-deferred | Withdrawals taxed as ordinary income; required minimum distributions apply |
| Roth IRA | Tax-free | Qualified withdrawals are tax-free; no required distributions for the original owner |
| Brokerage & savings | Taxable | Interest as ordinary income; qualified dividends and long-term gains at capital-gains rates |
RMD planner
Track required minimum distributions and plan withdrawals.
A typical order to draw from your accounts.
Drawing taxable money first lets tax-deferred and tax-free accounts keep growing. But the best order depends on your bracket each year.
- FIRSTTaxableBrokerage and savings accounts
- NEXTTax-deferredTraditional IRAs, 401(k)s and 403(b)s
- LASTTax-freeRoth accounts, usually saved for last
Five things that quietly raise taxes in retirement.
- Required minimum distributions.They generally begin at 73 (75 if born in 1960 or later) and can push you into a higher bracket.
- Social Security taxation.Extra IRA income can make more of your benefit taxable.
- Medicare premiums.Higher income can raise Part B and D premiums, based on your return from two years earlier.
- Bracket jumps.A large one-time withdrawal can be taxed at a higher rate than spreading it out.
- Missing charitable strategies.From 70½, giving directly from an IRA to charity can count toward RMDs without adding to taxable income.
Taxes in Retirement: Keep More of What You’ve Saved
Mary walks through withdrawal order, RMDs and bracket planning live.
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This guide is general information, not tax advice for your situation. Rules and thresholds change; talk with a qualified professional before acting.