Plans to Retire: How to Build a Tax-Smart Retirement Income Strategy for 2026 and Beyond

A successful retirement plan begins long before your final day at work. The foundation of a secure retirement is built on consistent, strategic retirement savings—leveraging the right retirement savings options and maximizing available tax advantages. Whether you’re just starting your career or already in your peak earning years, the decisions you make today will shape your financial well-being for decades to come.

Start Early, Benefit More: The earlier you begin saving for retirement, the more you benefit from the power of compounding. Even modest contributions to a retirement savings account can grow significantly over time, especially when invested in a diversified portfolio. Starting early also allows you to take advantage of higher contribution limits and catch up contributions as you approach retirement age, giving your retirement plan added flexibility.

Understand Tax Advantages: One of the most powerful tools in building retirement savings is understanding the tax advantages offered by different retirement savings options. Contributing to accounts like a 401(k) or traditional IRA with pre tax dollars can lower your current taxable income, allowing your investments to grow tax deferred until withdrawal. Alternatively, contributing after tax dollars to a Roth IRA means your savings can grow tax free, and qualified withdrawals in retirement are not subject to income tax. Health Savings Accounts (HSAs) also offer unique triple tax benefits for those eligible.

Make Informed Decisions: Choosing the right mix of retirement savings options depends on your personal circumstances, income level, and long-term goals. Consider factors such as your current and expected future tax rate, employer matching contributions, and the flexibility you may need as your life evolves. Regularly reviewing your retirement plan and adjusting your savings strategy ensures you’re making informed decisions that align with your retirement goals.

Take Action Now: Building a strong retirement savings foundation is about more than just setting money aside—it’s about making strategic choices that maximize tax advantages and set you up for a tax-smart retirement. Review your current retirement savings plan, explore all available retirement savings options, and seek guidance from a financial advisor or financial planner to ensure you’re on track for the retirement you envision.

By laying the groundwork today, you’ll be better prepared to enjoy the retirement you’ve worked so hard to achieve—confident that your retirement savings will support your lifestyle, future expenses, and legacy goals.

Translating “plans to retire” into action starts with specific dates, numbers, and lifestyle choices. Vague intentions lead to vague outcomes.

Choosing a target retirement window:

• Select a specific range (for example, retiring between ages 63–66) with a target date like January 1, 2027

• This anchor date drives decisions about savings, Roth conversions, and social security timing

• If you’re considering retiring early, factor in health care costs before Medicare at 65

Estimating your annual spending needs:

• Start with current expenses in today’s dollars (e.g., $100,000 per year after tax). Your retirement needs are determined by your desired lifestyle and expected expenses, which can change based on factors like retirement age and health care costs.

• Include housing, health care, travel, family support, and discretionary “fun” spending

• Add inflation (2–4% per year)—a 62-year-old planning to retire in 2028 should recognize that $100,000 today might require $110,000–$115,000 by retirement

A common guideline is to plan for your retirement income to replace 70% to 90% of your pre-retirement income to cover your retirement needs, with many experts suggesting at least 65% to 80% as a minimum. The 80% rule is often cited as a standard target, and it's common to discuss desired annual retirement income as a percentage of your current income, typically between 60% and 90%. Your annual income during retirement needs to be enough to meet your retirement expenses.

Separating needs, wants, and legacy:

Revolutionary Wealth helps clients prioritize by categorizing future expenses into three buckets:

This framework clarifies which retirement income sources should be guaranteed versus market-based.

The value of flexibility:

Working 1–2 extra years or transitioning to part-time can materially improve plan outcomes. For pre-retirees in their early 60s with high health care costs before Medicare, this decision alone can mean the difference between stress and security.

A solid plan to retire requires mapping every income source—both guaranteed and variable. Many of these sources fall under the umbrella of retirement savings plans, which include a variety of accounts and plans designed to help you save for retirement. Here’s how to gather the data you need.

Social Security Benefits

Your social security benefits form the foundation of most retirement income plans. Obtain your current statement at ssa.gov and understand benefits at three key ages:

The difference between claiming at 62 versus 70 can exceed $500,000 in lifetime benefits for a couple with longer life expectancy.

Employer Plans and Pensions

• Review 401 k and 403(b) statements for current balances and vesting dates

• Note pension formulas if applicable (e.g., 1.5% of final average salary times years of service)

• Request projections from cash-balance plans showing “hypothetical account” values at age 65

• Many employers offer matching contributions—ensure you’ve maximized these before retirement

IRAs and Roth IRAs

Consolidate scattered retirement savings accounts into a coherent view:

• Traditional IRA and rollover IRA balances (taxed as ordinary income at withdrawal)

• Roth IRA balances (tax free withdrawals if rules are met)

• Review beneficiary designations on each individual retirement account

Taxable Accounts and Other Assets

• Brokerage accounts holding mutual funds, stocks, and bonds

• HSAs (which can serve as stealth retirement medical accounts)

• 529 plans that may be partially redirected under certain rules

• Cash-value life insurance with accessible values

• Real estate or rental income

Business Owners and Self-Employed Individuals

Self employed individuals may have additional accounts requiring special integration:

• SEP IRAs or SIMPLE IRAs

• Solo 401(k) plans with higher contribution limits

• Defined benefit plans or cash balance plans

Revolutionary Wealth typically consolidates this information into a “household balance sheet” showing exactly how much income your assets can sustainably generate.

“Which account you tap first” can change your lifetime tax bill by six figures. This is especially true for couples retiring between 62–75, when taxable income fluctuates dramatically based on work status, social security timing, and RMD requirements.

Asset allocation and regular rebalancing are important for maintaining a well-diversified portfolio that aligns with your retirement goals and risk tolerance.

After considering the three tax buckets, remember that tax diversification—spreading savings across accounts with different tax treatments—can help control taxable income in retirement.

Understanding the Three Tax Buckets

A Coordinated Withdrawal Approach

Here’s what a tax-smart sequence might look like:

1. Early 60s (pre-Social Security): Use taxable accounts and modest pre-tax withdrawals to fill lower tax brackets

2. Gap years (63–72): Accelerate Roth conversions while income is temporarily low

3. Post-RMD age: Layer in Roth withdrawals strategically to control brackets

4. Throughout: Harvest capital gains in taxable accounts during low-income years

Example Scenario

Consider a 63-year-old couple retiring in 2026 with:

• $1.2M in pre-tax accounts (traditional IRA, 401 k)

• $200K in Roth IRA

• $150K in taxable brokerage

• $50K/year projected social security benefits (combined, starting at 67)

Without planning: They withdraw from pre-tax accounts, pay taxes at current rates, then face massive RMDs at 73 that push them into the 32% bracket while also increasing Medicare premiums.

With planning: They convert $50K–$75K annually to Roth during the gap years (ages 63–66), paying 22% now. By RMD age, their pre-tax balance is smaller, RMDs are manageable, and they have substantial tax-free Roth assets.

Revolutionary Wealth runs multi-decade tax projections to optimize this strategy for each client’s unique situation.

Roth conversions are a core Revolutionary Wealth strategy for pre-retirees who expect to be in a higher tax bracket in the future—or who simply want more control over their retirement income. Roth conversions are most advantageous when performed in years when you are in a lower tax bracket, such as after retirement but before required minimum distributions (RMDs) begin.

What Is a Roth Conversion?

A roth conversion moves money from a pre-tax IRA or 401(k) to a Roth IRA. You pay income tax now on the converted amount in exchange for:

• Tax free growth going forward

• No RMDs on converted amounts

• Tax free withdrawals in retirement

Why the “Gap Years” Matter

The window between retirement and RMD age (often ages 63–72) is prime time for conversions:

• Pre retirement income has stopped

• Social security benefits haven’t started (or are only partially claimed)

• You may be in the lowest tax bracket you’ll see for decades

Numeric Example

Scenario A: Convert $50,000 per year from 2026–2030 while staying in the 22% tax bracket. Total tax paid: approximately $55,000.

Scenario B: Wait until age 73. Large RMDs plus two social security checks push the couple into the 32% bracket. The same $250,000 in distributions costs $80,000 in taxes—and continues at elevated rates for years.

Pros and Cons of Roth Conversions

Revolutionary Wealth uses detailed tax software to map out multi-year Roth conversion “ladders,” coordinating with business income, capital gains, and potential tax law changes scheduled for 2026 and beyond.

RMDs are mandatory withdrawals from most pre-tax retirement accounts starting around age 73 (per current law). Missing an RMD triggers a 25% penalty on the amount not withdrawn.

Why RMDs Create Tax Problems

Large pre-tax balances—$1–3 million across 401(k)s and IRAs—can create sizable RMDs that:

• Push retirees into higher tax brackets

• Increase Medicare Part B and D premiums (IRMAA surcharges)

• Force taxable income exactly when you don’t need it

• Erode principal if markets are down during withdrawal

How Proactive Planning Helps

Before RMD age, you can:

• Execute Roth conversions to reduce pre-tax balances

• Use qualified charitable distributions (QCDs) up to $105,000 annually once age 70½

• Coordinate withdrawals in your 60s to smooth taxable income

Example

A 72-year-old with a $1.5M traditional IRA might face an RMD around $60,000 in year one (using the IRS uniform lifetime table factor of approximately 24.6). That $60,000 is taxed as ordinary income on top of social security benefits.

With prior planning and conversions during the gap years, that RMD could be significantly smaller—perhaps $35,000–$40,000—leaving more control over taxes and more money in tax-advantaged accounts.

Revolutionary Wealth’s RMD Roadmap

We create projections showing RMDs from the early 70s into the 90s, illustrating how different planning choices made in your early 60s impact required withdrawals decades later. This directly ties into estate and legacy goals—how much, and in what form, you want to leave assets to family members, charities, or a surviving spouse.

Annuities are often misunderstood. Some advisors oversell them; others dismiss them entirely. The truth is nuanced.

When Annuities May Be Useful

Revolutionary Wealth primarily considers fixed and fixed indexed annuities when appropriate:

• Creating a personal pension: Cover essential expenses with guaranteed lifetime income

• Reducing sequence-of-returns risk: Protect against market downturns in the first 5–10 years of retirement

• Longevity protection: Provide income you cannot outlive (critical when 25% of retirees live past age 90)

Contrasting Annuity Types

Drawbacks to Consider

• Illiquidity: Surrender charges may apply for 5–10 years

• Complexity: Riders and fee structures require careful review

• Inflation risk: Without COLA riders, purchasing power erodes

• Insurer strength: Must evaluate the backing company’s financial stability

Example Scenario

A 65-year-old client with $1.5M in investment options might allocate 20–30% ($300K–$450K) to a fixed indexed annuity. This could generate $40,000–$50,000 per year in guaranteed income. Combined with social security benefits, baseline needs are covered.

The remaining investment portfolio (70–80%) stays invested for growth, flexibility, and legacy—without the pressure of needing to sell during market downturns.

Our Approach

Revolutionary Wealth evaluates annuities as one tool among many. We often compare a guaranteed income annuity to a DIY “bond ladder plus Roth planning” approach, showing trade-offs in plain English. If an annuity doesn’t clearly improve outcomes, we don’t recommend it.

A successful plan to retire ties together taxes, health care, and legacy—not just investments and income.

Tax Coordination Strategies

• Tax-loss harvesting: Offset gains in taxable accounts by selling losing positions

• Asset location: Hold bonds in IRAs (ordinary income), stocks in taxable or Roth accounts (favorable capital gains treatment)

• Timing large expenses: Align major purchases (home remodels, vehicle purchases) with high-income or low-income years strategically

• Managing tax breaks: Bunch deductions in alternating years if itemizing

Healthcare Planning

Before Medicare (age 65):

• ACA marketplace plans (income affects subsidies)

• COBRA coverage (up to 18 months)

• Spouse’s employer plan

• Part-time work specifically for coverage

After Medicare:

• Understand IRMAA surcharges (higher income = higher premiums)

• Roth conversions affect Medicare premiums two years later

• Budget for supplemental coverage, Part D, and out-of-pocket costs

• Consider in home care and long-term care insurance

Estate and Legacy Planning

• Review beneficiary designations on IRAs, Roth IRAs, annuities, and life insurance

• Update wills and revocable trusts

• Consider tax-efficient gifting during life versus at death

• Understand the 10-year depletion rule for inherited IRAs (post-SECURE Act)

Example: A widowed pre-retiree may not have reviewed beneficiaries since their spouse’s death. Outdated designations could send retirement account assets to unintended recipients or create tax problems for heirs.

Revolutionary Wealth frequently works with clients’ CPAs and estate attorneys to implement integrated plans, ensuring RMD strategies, Roth conversions, and trust structures all work in concert.

This section serves as a concise guide to how a near-retiree uses each account type—not just their definitions.

Employer Plans

For someone in their early 60s, the focus shifts from maximizing contributions to coordinating rollovers and distribution planning.

IRAs and Roth IRAs

• Contribution limit (2025-2026):$7,000 + $1,000 catch up contributions for age 50+

• Traditional IRA: Contributions may be deductible; withdrawals taxed as ordinary income

• Roth IRA: Contribute after tax dollars; qualified withdrawals are tax free

• At this stage, tax-efficient distribution planning often matters more than contribution decisions

Business Owner Options

Self employed individuals and small business owners have additional retirement savings options with higher contribution limits:

• Solo 401(k): Up to $69,000 total (2025), plus catch-up

• SEP IRA: Up to 25% of net self-employment income

• SIMPLE IRA:$16,000 + $3,500 catch-up (2025)

• Defined Benefit/Cash Balance Plans: Can shelter $200,000+ annually for high earners in their early 60s

Health Savings Accounts (HSAs)

A healthy 60-year-old might deliberately accumulate HSA balances as a “stealth retirement medical account.” HSAs offer triple tax advantages:

1. Pre tax dollars contribution

2. Grow tax free

3. Tax free withdrawals for qualified medical expenses

After age 65, HSA funds can be used for any purpose (taxed as ordinary income if not medical).

The Revolutionary Wealth Approach

We don’t simply list accounts—we design a coordinated “stack” of these tools around your target retirement date, cash flow needs, and tax situation.

After decades of saving, many retirees find it emotionally difficult to start spending their retirement savings. This psychological shift is as important as any technical planning decision.

Key Mindset Shifts

• From accumulation to income: Your portfolio is now a paycheck machine, not just a growing asset

• Accepting fluctuation: The market will move; your plan is stress-tested to handle volatility

• Sustainable withdrawal rates: Historically, a 4% withdrawal rate (adjusted for inflation) has provided durable income over 30-year periods, though other factors like sequence of returns require ongoing attention

Example

A 64-year-old couple retiring in 2027 has saved 15% of pre retirement income for 30 years. Now they’ll flip the script—receiving a structured “paycheck” from their accounts each month. For helpful tools and resources to support your retirement planning, visit our financial tools page.

Their $2 million diversified portfolio generates approximately $80,000/year (4% rate), supplemented by $48,000 in social security benefits. Total retirement income: $128,000—replacing their previous salary while preserving principal for later years.

Guardrails-Based Strategies

Rather than rigidly withdrawing 4% regardless of market conditions, guardrails-based approaches adjust spending slightly:

• Strong markets: Modest spending increase (enjoy more money when available)

• Down markets: Temporary modest reduction to preserve portfolio

• Result: Clients feel in control without micromanaging every market move

The Revolutionary Wealth Difference

We spend considerable time in meetings translating complex projections into simple, understandable language: “Here’s your monthly paycheck and tax estimate.”

Single, divorced, and widowed women often seek additional clarity and confidence. Our planning process is collaborative and education-focused—not jargon-driven. We meet you where you are and build understanding together.

Here’s what working with Revolutionary Wealth actually looks like:

Our Planning Process

1. Discovery Meeting: Gather data including statements, tax returns, social security projections, and retirement goals

2. Goal Clarification: Define your retirement date, lifestyle targets, and legacy priorities

3. Base Retirement Income Plan: Build a year-by-year income schedule showing where each dollar comes from

4. Tax Strategy Layer: Design Roth conversions, RMD roadmap, and tax bracket management approach

5. Risk and Insurance Review: Evaluate longevity risk, health care costs, and potential need for annuities or long-term care coverage

6. Stress Testing: Run the plan under different market scenarios, longevity assumptions (planning to age 95+), and tax environments

What You Receive

• Written retirement income schedule (year-by-year through your 90s)

• Roth conversion recommendations for the next 3–5 years

• Clear action steps: consolidating accounts, revising beneficiary designations, coordinating with your CPA

• Ongoing reviews to adjust for life changes and market conditions

Why Revolutionary Wealth

• Independence: Not tied to a single product provider—we recommend what’s best for you

• Fiduciary duty: Legally obligated to act in your best interest

• Integration: We coordinate with your CPA and estate attorney for seamless implementation

• Specialization: Deep expertise in pre-retiree tax planning, business owner exits, and retirement income

We position ourselves as the premier partner for thoughtful, tax-forward financial planning—helping you make informed decisions with confidence.

Delaying planning often leads to avoidable taxes, suboptimal social security decisions, and rushed investment choices about annuities or rollovers. The best time to start was years ago. The second-best time is now.

What to Bring to an Initial Call

• Recent account statements (401(k), IRA, Roth, brokerage)

• Last two years of tax returns

• Social Security statement (from ssa.gov)

• Pension estimates or employer benefit summaries

• List of planned major expenses in the next 5–10 years

Your Next Step

Revolutionary Wealth offers an initial consultation focused on assessing retirement readiness and tax-efficiency opportunities. This is your chance to get clarity on whether your current trajectory aligns with your retirement goals.

Book a 30–60 minute call today to review your plan to retire and identify 2–3 high-impact strategies—such as Roth conversions or RMD reductions—tailored to your specific situation.

Your financial well being in retirement depends on the decisions you make in the next few years. Don’t leave money on the table or pay taxes you don’t have to owe taxes on. Take the first step toward a confident, tax-smart retirement.

Book Your Planning Call with Revolutionary Wealth

These FAQs address common, practical questions not fully covered above—especially around timing and edge-case decisions.

How early should I start to save for retirement, and how much should I save?

It’s best to start saving for retirement as early as possible to take advantage of compounding, where your savings generate their own earnings over time. Financial experts recommend saving at least 15% of your income each year for retirement. Starting early and saving consistently can make a significant difference in your retirement fund.

How much should I aim to save for retirement?

A common guideline is to save 25 to 30 times your expected annual expenses by the time you retire. This helps ensure you have enough funds to cover your needs throughout retirement.

Should I have an emergency fund before I retire?

Yes, it’s advisable to establish an emergency fund that covers 3 to 6 months of living expenses before you retire. This provides a financial cushion for unexpected events and helps protect your retirement savings.

What if I want to retire before age 65?

If you plan to retire before age 65, you’ll need to secure private health insurance until you become eligible for Medicare, which begins at age 65. Consider the cost of private insurance in your retirement planning.

How much should I plan for health care costs in retirement?

Health care costs can be significant in retirement. A healthy 65-year-old couple may need over $300,000 for lifetime medical expenses, and Medicare does not cover all expenses. Be sure to include these costs in your retirement plan.

What about long-term care?

Long-term care is needed by roughly 60% of people at some point, and it is not covered by Medicare. Consider long-term care insurance or other strategies to cover these potential costs.

Should I review my estate and legal documents as part of my retirement plans?

Yes, regularly reviewing your estate and legal documents is important to ensure they are up to date and reflect your current wishes.

Why is maintaining social connections important after retirement?

Maintaining social connections post-retirement is crucial for both mental and physical well-being. Staying engaged with friends, family, and your community can help you enjoy a healthier and more fulfilling retirement.