Five Tax Moves To Review Before Your First Year Of Retirement

Your last working year and first retirement year can be very different from a tax perspective. That transition creates both risk and opportunity.

1. Review Your Income Timing

Bonuses, deferred compensation, business income, stock sales, and retirement account withdrawals may all stack on top of one another. Looking at the sequence of income can help you avoid accidental bracket creep.

2. Evaluate Roth Conversion Opportunities

Some households have lower-income years between full-time work and required minimum distributions. Those years may be worth reviewing for partial Roth conversions, depending on your goals and future tax outlook.

3. Plan Which Accounts You Will Draw From First

Taxable accounts, tax-deferred accounts, and Roth accounts do not affect your return the same way. Withdrawal sequencing can influence taxes, Medicare premiums, and long-term flexibility.

4. Revisit Withholding And Estimated Payments

Once payroll stops, tax withholding may need to come from pension income, Social Security, IRA distributions, or quarterly estimates. It is better to make that adjustment before a large balance is due.

5. Coordinate Tax Planning With The Income Plan

Tax decisions should support the retirement income plan rather than compete with it. The most useful strategy is usually the one that balances taxes today with flexibility later.