Frequently asked questions
Which account should I draw from first?
The common order is taxable accounts first, then tax-deferred, then Roth last, because it leaves the tax-free account growing longest. It is a starting point, not a rule. Draining taxable accounts first can leave you with nothing but ordinary income later, which is what pushes retirees into Medicare surcharges in their 70s.
Is Social Security taxable?
Often, partly. If your provisional income is above $25,000 filing single or $32,000 filing jointly, up to 50% of your benefit becomes taxable, and above $34,000 and $44,000 up to 85% does. Those thresholds are written into the statute and are not adjusted for inflation, so more retirees cross them every year.
Does a Roth conversion raise my Medicare premiums?
It can. A conversion increases your modified adjusted gross income for that year, and Medicare sets your premium from the return filed two years earlier. A conversion at 63 can therefore raise your premium at 65. Model the conversion and the surcharge together, not separately.
Which state taxes my pension, the one I earned it in or the one I live in?
The one you live in. Federal law bars states from taxing the retirement income of former residents, so once you move and genuinely establish domicile, your new state's rules apply. Establishing domicile takes more than a forwarding address.
Do I still have to file a return if I am retired?
It depends on the amount and source of your income, not on whether you are working. Social Security alone often falls under the filing threshold; add a pension, RMDs or investment income and you are usually filing. Filing can be worth doing even when it is not required, to claim a refund of withheld tax.
What is the single biggest tax lever a retiree still controls?
The years between retiring and the start of required minimum distributions. Income is often at its lowest, the brackets are at their widest relative to that income, and converting during that window is the one move that changes the tax rate on a large balance rather than just the timing.