When planning for retirement, the wealthy have a big worry: taxes. Indeed, one of the top \u201cburning questions\u201d high-net-worth individuals have regarding retirement is \u201chow will taxes impact me in retirement?\u201d according to a 2025 study from Northwestern Mutual.<\/p>\n
\u201cTaxes are often the biggest silent expense in retirement, so the goal is to be intentional about when and how you pay them,\u201d says certified financial planner Elaine King Fuentes, founder and CEO of Family and Money Matters. <\/p>\n
We asked six financial experts how high-net-worth individuals can navigate tax complexities while preserving long-term wealth.<\/p>\n
Roth conversions <\/p>\n
Roth conversions can act as a helpful tool by enabling tax-free growth and reducing required minimum distributions. \u201cIf a client is in a lower income tax bracket early in retirement (before RMD age), they can elect to do a Roth conversion and decide how much IRA assets they want to convert to Roth IRA,\u201d says Spencer Betts, CFP at Bickling Financial. \u201cThey pay ordinary income taxes on the conversion, but once in the Roth IRA, there are no taxes on distributions and no RMD requirements.\u201d<\/p>\n
For his part, CFP Jeremy Shipp, founder and president at Retirement Capital Planners, believes the time between retirement and taking RMDs is the most valuable tax opportunity his clients will have. \u201cIncome is temporarily lower. RMDs haven\u2019t started yet. Roth conversions are strategic, not just tactical. Advisers who treat this window as a one-time event \u2014 rather than a multiyear planning runway \u2014 are leaving money on the table.\u201d<\/p>\n
Fuentes says tax-efficient planning starts with understanding how different investment \u201cbuckets\u201d are taxed. \u201cIf most assets sit in a traditional IRA, remember every dollar comes out as ordinary income, so converting to a Roth \u2014 if the tax bracket and cash flow allow \u2014 can create flexibility later,\u201d says Fuentes. \u201cIn taxable portfolios, the mistake I see is not what people own, but where they hold it. Some investments generate income without real growth and end up creating unnecessary tax drag. With the right mix and timing, you can materially improve what you actually keep.\u201d<\/p>\n
Charitable gifting and donor-advised funds<\/p>\n
Using donor-advised funds is a strategy to offset Roth conversions while giving back to charities you care about, says Betts. \u201cIf a client is so inclined, they can do large charitable donations to a donor-advised funds and then use those resources to give to different charities over the rest of their lives, while offsetting current income taxes for large taxable income events like a Roth conversion,\u201d says Betts. <\/p>\n
Note that a qualified charitable distribution lets people who are over 70 \u00bd donate up to $111,000 from a taxable IRA to a charity, tax-free. This can help minimize taxes from required minimum distributions, which start at age 73. \u201cOnce RMDs start, if a client has a charitable interest, they can send their RMD amount directly to a charity and that counts towards their RMD requirements,\u201d says Betts. <\/p>\n
And, charitable giving can go beyond QCDs. \u201cWe evaluate gifting appreciated assets, bunching deductions, qualified charitable distributions from an IRA or possibly even some form of charitable trust,\u201d says John Jones, CFP and enrolled agent at Heritage Financial.<\/p>\n
Tax-loss harvesting<\/p>\n
Tax-loss harvesting is a way to reduce an investor\u2019s overall tax liability by using investment losses to offset capital gains.<\/p>\n
\u201cAn after-tax mutual fund may be delivering significant capital gain distributions \u2014 and reallocating them to a portfolio with tax-loss harvesting features could help to possibly improve after-tax returns and create tax deductions,\u201d says Jones. \u201cFor individuals with a concentrated position, we may have the ability to derisk the concentrated position and start to create deductions against the basis of this position.\u201d<\/p>\n
Tax diversification<\/p>\n
CFP Charles Sachs, chief investment officer at Imperio Wealth Advisors, says planning ahead of retirement is key. \u201cMany high-net-worth individuals are heavily concentrated in appreciated assets, whether a business, real estate or concentrated stockholdings. The tax outcome of those positions is often significantly influenced before the liquidity event, not just after,\u201d he says. \u201cAt the same time, building tax diversification across taxable, tax-deferred and tax-free accounts can provide greater flexibility later on, particularly when managing income in retirement.\u201d<\/p>\n
Hire a financial adviser and accountant<\/p>\n
And while there\u2019s no one-size-fit-all approach to tax planning, pros say working with a professional can help bolster your long-term wealth strategy. In short, \u201cthe straightforward answer is to work with a team of professionals who can identify the taxes the retiree is exposed to, the outcome and how to mitigate the exposure,\u201d says Sam Tutko, enrolled agent and vice president of Miser Wealth Partners. You can use CFP Board, NAPFA and this free tool to get matched with fiduciary financial advisers<\/a> from our ad partner SmartAsset.<\/p>\n","protected":false},"excerpt":{"rendered":"When planning for retirement, the wealthy have a big worry: taxes. Indeed, one of the top \u201cburning questions\u201d…\n","protected":false},"author":2,"featured_media":393061,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[1368,114,631,80312,268,4196,122,85,8757,4141,117134,46,3191,266,267,6674,27747,929,21741,5087,92549],"class_list":{"0":"post-393060","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-advice","9":"tag-business","10":"tag-community","11":"tag-content-types","12":"tag-finance","13":"tag-financial-services","14":"tag-general-news","15":"tag-il","16":"tag-insurance","17":"tag-investing","18":"tag-investing-securities","19":"tag-israel","20":"tag-life-insurance","21":"tag-personal-finance","22":"tag-personalfinance","23":"tag-political","24":"tag-political-general-news","25":"tag-retirement-planning","26":"tag-securities","27":"tag-society","28":"tag-society-community"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/393060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=393060"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/393060\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/393061"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=393060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=393060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=393060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}