By Resurgent Financial Advisors
They gather their paperwork, send it off to the CPA, and wait to hear whether they owe more or get a refund. The cycle repeats, year after year. Simple, right?
Unfortunately, simplicity today often leads to complexity tomorrow – especially for high-income earners and successful families approaching retirement. While you may feel confident in your current tax picture, the real question is: What story are you writing for your future self?
Too often, the biggest tax bills arrive not because of bad luck, but because of missed strategy. Decisions made in your 50s and 60s – how you save, invest, and withdraw – can quietly shape the tax burden you’ll face in retirement and beyond. The impact of those choices often compounds for decades.
Taxes Are a Long Game, Not a One-Time Event
It is common to think of taxes as something to react to. Your accountant files based on what already happened. You look backward. You tally up. You move on.
That approach may suffice for simpler financial situations. However, for those with real wealth and multi-phase income, the key to tax efficiency lies in forecasting, not reporting.
Tax planning is not about avoiding your obligations. It is about aligning your financial life with the rules in a way that honors both your goals and your values. In a world where tax laws change regularly, and your life changes even faster, staying passive is often the most expensive choice.
Let’s walk through a few of the most common ways people unintentionally create tax trouble for their future selves – and what to consider instead.
Mistake #1: Overloading Pre-Tax Accounts
There is a special kind of satisfaction in seeing your 401(k) balance grow. Contributions reduce taxable income, the balance compounds tax-deferred, and many employers offer a match. It feels like the ultimate financial win.
Until the Required Minimum Distributions begin.
Once you reach age 73 (or 75 for younger cohorts), the government begins requiring withdrawals from your traditional retirement accounts. These RMDs are taxed as ordinary income, regardless of whether you need the money.
For many clients, the surprise comes when they realize just how large those distributions become – and how quickly they push them into higher tax brackets, increase Medicare premiums, or trigger the Net Investment Income Tax.
Pre-tax accounts are a powerful tool, but not the only one. For many, it makes sense to balance contributions across traditional and Roth accounts, especially in low-income years, or after major liquidity events.
Mistake #2: Delaying Roth Conversions for Too Long
Roth conversions are often discussed, rarely implemented, and frequently misunderstood.
At their best, they offer the chance to move funds from tax-deferred to tax-free status – paying tax now to avoid larger taxes later. For example, a recently retired client with a few gap years before Social Security and RMDs might be in a much lower bracket temporarily. Filling up those brackets with partial conversions can create long-term savings.
The problem is that many people wait too long. Once RMDs begin, the window narrows. Once Social Security or pension income starts flowing, your baseline income rises. Once markets bounce back or required withdrawals spike, conversions lose efficiency.
Early and strategic Roth planning is a gift to your future self. It gives you flexibility in retirement, control over your tax bracket, and often smoother coordination with estate planning.
Mistake #3: Ignoring Capital Gains Until It’s Too Late
The phrase “just hold it” has become a mantra in many investment conversations. While it reflects a disciplined mindset, it can sometimes hide a brewing tax issue – especially for clients holding highly appreciated assets in taxable accounts.
You may not be actively realizing gains, but eventually you or your heirs will. That realization could come in the form of portfolio rebalancing, charitable giving, business liquidation, or the sale of real estate. When that time comes, the concentrated position you were proud of becomes a tax headache.
One helpful strategy is tax-loss harvesting – selling securities at a loss to offset gains elsewhere. Another is gain harvesting, especially in years where income is unusually low. Charitable gifting strategies using appreciated stock can also eliminate tax while supporting causes that matter.
Capital gains do not need to be feared, but they should be managed. A tax-smart investment plan acknowledges the reality of gains and builds options to address them with intention.
Mistake #4: Underestimating Medicare Brackets
You may not think of Medicare as a tax. On paper, it isn’t. In practice, it often functions like one.
Medicare premiums are means-tested, based on your income from two years prior. If your modified adjusted gross income crosses certain thresholds, you could see surcharges of hundreds – or thousands – of dollars per year in added premiums.
Roth conversions, RMDs, capital gains, and even Social Security income can all contribute to these calculations. Without coordination, a seemingly wise financial move can accidentally increase your Medicare costs for a full year or more.
This is why we always run tax modeling before executing large transactions. The goal is to ensure your decisions serve your overall financial well-being – not just your short-term savings.
Mistake #5: Assuming Your Heirs Will Be Better Off
Legacy is about more than leaving behind assets. It is about leaving behind clarity.
Many clients build their wealth thinking their children or charities will simply “figure it out” when the time comes. Unfortunately, the Tax Cuts and Jobs Act of 2017 eliminated the “stretch IRA” for most non-spouse beneficiaries. That means inherited IRAs now must be fully distributed within 10 years – often during peak earning years for your heirs.
The result? Compressed timelines, higher tax brackets, and a loss of tax-deferral opportunities.
Including your children or trustees in the planning process can help. So can exploring vehicles like Roth accounts, charitable remainder trusts, or lifetime gifting strategies. A coordinated estate plan ensures that your legacy creates benefits – not burdens.
Planning for the You of Tomorrow
There is no magic number that defines tax efficiency. Every client we work with has different priorities, income sources, family dynamics, and risk tolerances. The right plan for you depends on who you are now – and who you hope to become.
Planning is not about perfection. It is about reducing regret.
At Resurgent, we approach tax strategy with humility and clarity. We collaborate with your CPA, estate attorney, and other professionals to create a forward-looking roadmap that supports your financial goals and life vision.
If you have been wondering whether your current plan is setting you up for long-term efficiency, let’s take a closer look. Your future self will thank you.
