Rethinking Retirement Taxes: A Generational Approach to Smarter Planning
Summer is here, and with it, we’re excited to share a preview from our upcoming book, The Four Buckets—this time focusing on a topic that always sparks interest: taxes in retirement.
There was a time when we hosted retirement seminars covering a range of topics: health care, long-term care, investing, and more. All were important, but one subject consistently drew the biggest crowd: taxes.
Why Taxes Are Top of Mind for Retirees
It’s easy to understand why. Retirement introduces a new world of income sources—Social Security, pensions, IRAs, investment accounts—and each comes with its own tax implications. You’ve gone from simple paycheck withholdings to a system where you have more control, but possibly less clarity.
Here’s the surprising part: for most retirees, taxes don’t have to be a nightmare.
Unless you’re extremely wealthy or self-employed, the tax burden in retirement may not be as high—or as scary—as it's made out to be. In fact, taxes are just one piece of the puzzle. The real focus should be on your income strategy.
Income First, Taxes Second
That’s where the Four Buckets Retirement Income Strategy® comes in. Our approach helps retirees create a reliable income stream that naturally supports tax efficiency—without losing sight of what truly matters: living well.
Most retirees have built their nest egg in pre-tax accounts like 401(k)s and IRAs. These accounts were great during your working years—contributions were tax-deferred, allowing your investments to grow. But when you retire and start withdrawing money, taxes come back into play.
While this might seem like a downside, it can actually be an opportunity—especially if you start thinking generationally.
A Real Example: Mike’s Story
Let’s say Mike, a retiree, follows a common strategy: he only withdraws the minimum required amount from his IRA. His taxable income stays low, which seems like a smart move.
But Mike has two adult children who are doing well financially—and are in higher tax brackets. When Mike passes away, his IRA will go to them. And when they’re required to liquidate it? They’ll pay taxes at much higher rates.
Now imagine Mike had taken a different approach. By following the Four Buckets strategy, he could have drawn more from his retirement accounts at a tax rate lower than his children’s—using the extra income for personal enjoyment, charitable giving, or smart reinvestment.
The Big Idea: Think Beyond Your Lifetime
By planning for taxes with the next generation in mind, retirees can:
Lower their family’s total tax burden
Increase personal income while keeping taxes manageable
Leave a smarter, more intentional legacy
Retirement planning isn’t just about making your money last—it's about using it well. And when done right, a sound income strategy can take the sting out of taxes—for you and for those you love.
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