At Cardinal Advisors, we’ve built our financial planning process around what we call the Seven Money Worries. If you’ve followed our videos, you’ve seen this framework on our whiteboard – running down both sides – and you know that these seven areas guide every retirement plan we write. Today’s lesson is all about income taxes. But before we dive in, I want to be clear: while taxes are important, they aren’t where we start.

Too often, people walk through our doors with one thing on their mind – taxes. They’re frustrated with what they owe, and they want us to “fix it.” While we can help reduce taxes, we don’t begin there. Why? Because taxes are interconnected with every other money worry. We need a full plan before we know what tax strategy makes the most sense. That’s why income taxes come last in our process – but don’t worry, they’re still a big part of the conversation.

Let’s walk through how taxes interact with each of the Seven Money Worries:

1. Social Security

Taxes and Social Security go hand-in-hand. If your only income is Social Security, you probably won’t pay income tax. But once you add moderate to high “other” income – from IRAs, pensions, or investments – up to 85% of your Social Security benefit becomes taxable.

Planning opportunity: We often delay Social Security to age 70 while converting IRA money to Roth IRAs. That keeps “other” income low when you do begin Social Security, reducing the taxable portion of your check.

2. Medicare (IRMAA)

Your Medicare premiums can increase significantly based on income – this is called IRMAA (Income-Related Monthly Adjustment Amount). The kicker? IRMAA uses your tax return from two years ago.

Planning opportunity: If you recently retired or had a life-changing event (like work stoppage), we can appeal IRMAA and potentially lower your premiums. That’s a big reason why tax planning before and after retirement matters.

3. Long-Term Care

If you’re still working or run a business, there are ways to deduct long-term care insurance premiums through your business. But the bigger story is on the benefit side. Tax-qualified policies pay out tax-free, which is critical when you’re facing a $100,000+ per year care need.

Planning opportunity: Hybrid long-term care policies (like life insurance with LTC riders) can grow tax-free and provide tax-free benefits – which is a powerful combo.

4. 401(k)/IRA Withdrawals

This is where most tax planning happens – and for good reason. Traditional IRAs and 401(k)s are fully taxable when you take money out. That means pulling from these accounts can:

• Increase your IRMAA
• Make your Social Security more taxable
• Push you into a higher tax bracket

Planning opportunity: Roth conversions! Yes, you pay tax now, but it can lower your lifetime tax bill, reduce future IRMAA, and give your heirs tax-free money. Just understand – Roth conversions ripple across multiple areas of the plan.

5. Income (in retirement)

This is where retirement tax planning gets more flexible. Unlike your working years, when a W-2 told you your income, in retirement you control it. Between Roth IRAs, taxable accounts, and traditional IRAs, you can strategically choose where to take income based on the tax outcome.

Planning opportunity: Build a bottom-up income plan – start with monthly spending needs, then layer in taxes based on how we choose to draw the income. This allows us to “pick” your tax bracket in a sense.

6. Estate Planning

When you pass, how much your heirs keep depends on taxes. Traditional IRAs are inherited with a tax liability, and non-spouse heirs must empty the account within 10 years – potentially during their highest-earning years.

On the flip side:

• Roth IRAs pass tax-free.
• Life insurance proceeds are tax-free.
• Capital assets (like your home or investments) receive a step-up in basis – no capital gains tax when sold.

Planning opportunity: Use a mix of accounts and strategies to maximize what your loved ones inherit after tax.

7. Income Taxes (Directly)

Finally, we get to taxes head-on. We study the tax brackets daily – we even keep cheat sheets on our desks. We know, for instance, that in 2025 a married couple can earn up to $206,000 and still stay in the 22% bracket. Knowing that lets us plan Roth conversions or other moves without accidentally jumping tax brackets.

Planning opportunity: Smart tax planning lets you fill up lower brackets now to avoid higher ones later – especially when rates could rise in 2026 and beyond.

The Takeaway

Yes, taxes matter. But taxes don’t live in a vacuum. Every financial move you make in retirement touches multiple money worries. A Roth conversion might increase IRMAA now but save your spouse and children thousands later. Choosing when to take income or Social Security affects both your current tax bill and long-term plan.

That’s why we build full retirement plans using the Seven Money Worries as our guide. Taxes are the last step in that journey – but they’re woven into every part of it.