SC-based TruNorth Advisors explains how early, tax-smart income planning prevents surprise bills in retirement, sharing data and practical steps any household earning under $250k can start this year.
Retirees often discover that federal and state taxes remain their single biggest line item, even after mortgage and commuting costs disappear. Understanding how withdrawals interact with brackets and Medicare premiums can help to preserve thousands every year.
South Carolina advisory firm, TruNorth Advisors says most clients first learn about tax drag when required minimum distributions begin. Its tax planning focus shows that moves taken five to ten years before retirement age can soften the blow later on.
A 2024 Vanguard report estimates that coordinated withdrawal sequencing can add 1% – 2% in annual after-tax return, yet only 17% of households follow a formal plan. Meanwhile, Social Security’s annual trustees report warns the combined trust fund could be depleted by 2035, increasing pressure on general revenues.
Good planning doesn’t require perfect foresight—only deliberate action. Mapping income sources and filling lower brackets with elective Roth conversions can convert tax volatility into a known cost.
“Taxes are like termites; they work slowly and quietly until the damage becomes obvious,” a TruNorth adviser states. A partial conversion during a sabbatical year can often save more than a full conversion once Social Security and pensions start.
Households earning under $250,000 can also benefit from asset-location tactics. Placing dividend-heavy ETFs in tax-advantaged accounts while keeping low-turnover index funds in brokerage accounts can help to improve after-tax yield without changing overall allocation, and combining both ideas can potentially lift returns without increasing portfolio risk.
Waiting until age 73 to think about required minimum distributions ranks high on the list of pitfalls. Ignoring the two-year look-back that sets Medicare premiums and triggering the net investment income tax by liquidating large brokerage positions all at once are costly missteps that can derail even well-planned retirements.
A written retirement tax plan that assigns each dollar a withdrawal window gives retirees clearer sight lines and greater peace of mind. Those steps can help transform surprises into anticipated obligations, supported by better timing and thoughtful financial coordination.
