Rich Bean, President and CEO of The Retirement Advisors in Manchester, NH, has spent 35 years helping retirees restructure their finances after leaving the workforce. In that time, one pattern has repeated itself across clients from IBM, Raytheon, Amazon, Verizon, and dozens of other major employers: most retirees are paying far more in taxes than they should. In many cases, Bean has helped clients reduce their annual tax burden by as much as 50 percent, not through aggressive sheltering schemes, but through straightforward retirement income planning that most financial advisors overlook.
The Tax Problem No One Talks About Before Retirement
The years between retirement and age 73, when required minimum distributions kick in, represent a narrow window of opportunity. During this period, retirees often have lower income than they did while working, which places them in a lower tax bracket. Most people respond by doing nothing with that bracket space. That is a costly mistake.
The core issue is that tax planning does not stop at retirement. It changes shape. Retirees who spent decades deferring taxes into 401(k)s and IRAs often find themselves facing large taxable withdrawals later, precisely when Social Security income and RMDs combine to push their bracket higher. A proactive strategy, built during those early retirement years, can prevent that compression from happening at all.
Roth Conversions During Low-Income Years
One of the most reliable tools in retirement tax planning is the Roth conversion. When a retiree’s income drops after leaving work, the gap between their current bracket and the next one up becomes usable space. Converting a portion of a traditional IRA into a Roth IRA during that window means paying tax at a lower rate now in exchange for tax-free growth and withdrawals later.
Bean works with clients to calculate exactly how much to convert each year without triggering a bracket jump. A married couple filing jointly in 2025 can keep their taxable income below $94,050 and remain in the 22 percent bracket. Converting $20,000 to $30,000 per year over several years, rather than leaving the entire balance to compound and grow tax-deferred, can eliminate a significant portion of what would otherwise become a large RMD obligation at 73.
For retirees who held company stock in their 401(k), a related technique called Net Unrealized Appreciation allows them to take a lump-sum distribution of that stock at ordinary income rates on only the cost basis, with the appreciation taxed later at long-term capital gains rates, which are considerably lower for most households.
Reducing Taxes on Social Security Income
Many retirees do not realize that Social Security benefits become partially taxable once combined income, defined as adjusted gross income plus nontaxable interest plus half of Social Security benefits, exceeds certain thresholds. For individuals, the threshold is $25,000. For married couples, it is $32,000. Above those levels, up to 85 percent of Social Security benefits become subject to federal income tax.
The fix is not complicated, but it requires deliberate sequencing of income sources. By drawing down taxable accounts first in the years before Social Security is claimed, retirees can lower their combined income during the period when they are most exposed to Social Security taxation. Delaying the Social Security claim itself, often to age 70 to maximize the monthly benefit, further reduces the years during which partial benefits create a tax drag.
Bean has helped clients from large-company retiree pools, including Comcast, Coca-Cola, and FedEx, structure their withdrawal sequences specifically to keep combined income below the 85 percent threshold for as long as possible. The cumulative tax savings across a 20-year retirement can reach into the tens of thousands of dollars.
Asset Location as a Tax Reduction Strategy
Equally important is where assets are held, not just how much is saved. Placing income-generating investments, bonds, REITs, dividend-paying stocks, inside tax-advantaged accounts while keeping growth-oriented equities in taxable accounts allows retirees to minimize the income that triggers taxes each year. This approach, known as asset location, is distinct from asset allocation and is frequently ignored even by advisors who otherwise do competent work.
A retiree holding a bond fund in a taxable brokerage account pays ordinary income tax on the interest every year. That same bond fund inside a Roth IRA generates income that is entirely tax-free on withdrawal. The difference in after-tax return over a decade can be meaningful, particularly for retirees who are drawing on both account types simultaneously.
Bean combines asset location decisions with withdrawal sequencing and Roth conversion planning to build a coordinated retirement tax strategy rather than addressing each piece in isolation. The goal is to reduce taxes in the early retirement years while simultaneously reducing the taxable balance that will generate RMDs later.
Retirees who take a passive approach to taxation, simply pulling from accounts as needed without a structured plan, consistently leave money on the table. The strategies that reduce a tax bill by 30, 40, or 50 percent are not complicated once the mechanics are understood. They require accurate projections, careful timing, and a clear view of how each income source interacts with the others. For retirees looking to make their savings last and their income go further, that kind of planning is not optional. It is the foundation of a financially secure retirement.
Rich Bean is the President and CEO of The Retirement Advisors, based in Manchester, NH. He has 35 years of experience advising retirees from major employers on tax reduction, income planning, and estate strategy. Learn more at retirement-advisors.com.
