Craig Wear, CFP®Craig Wear, CFP® | Expert in Roth Conversions & Tax-Efficient Retirement Strategies for IRA Millionaires

Avoid This Retirement TAX TRAP

9 Feb 2026 · 1 min

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1:01

In this concise financial‑advice segment, Craig Wear, CFP®, warns retirees about a common mistake that can make higher taxes almost inevitable. He explains that before retirement most people have a relatively steady income that keeps them in a consistent tax bracket. Once they stop working, that paycheck is replaced by Social Security, pensions, rental income, and capital gains, which already occupy a large portion of the tax bracket. At age 73, required minimum distributions (RMDs) from IRAs and 401(k)s must be taken, regardless of need, and are counted as taxable income. For those with sizable retirement savings (e.g., over $1 million), the RMDs stack on top of other retirement income, pushing retirees into higher tax brackets and stripping them of control over their tax liability. This stacking effect constitutes the “tax trap” the speaker urges viewers to avoid.

Chapters

There's one mistake that makes higher taxes in retirement almost unavoidable. In the last few years before retirement, your income usually looks fairly steady. You have income from work, investments, maybe a business. You stay in roughly the same tax bracket each year. Then retirement starts. The paycheck goes away, but it gets replaced by Social Security, by pensions, maybe rental income and capital gains. That income already fills up a large part of your tax bracket. And then, at age 73, required minimum distributions. RMDs begin every year. The IRS tells you exactly how much you must take out of Your IRA and 401k and counted as taxable income. And that's whether you need the money or not, folks. So if you've saved over a million dollars, that income now stacks on top of everything else. Instead of smooth taxes, your income piles up. You get pushed into higher brackets, and guess what? You lose control. That's the tax trap.