Most couples plan their retirement around the paycheck they earn today. The number that actually matters is the paycheck they bring home — and once you retire, you control far more of the tax math than you ever did while working.

When you’re working, taxes mostly take care of themselves. Your employer withholds them, you deposit what’s left, and in April you get a small refund or write a small check. You rarely have to think about it.

Retirement flips that arrangement. There’s no employer withholding on your behalf. Instead, you decide which accounts to draw from, when to claim Social Security, whether to convert to a Roth, and how much income to show the IRS in any given year. Each of those choices ripples into other parts of your plan: how much of your Social Security is taxed, what you pay for Medicare, and what your surviving spouse and children will owe someday.

At Cardinal Guide, we treat income tax planning as one of the core worries in every retirement plan. Below are the six places where we see taxes quietly change the outcome for retirees — and the calculation most couples never run.

1. Social Security: taxed based on everything else you earn

Social Security is the foundation of most retirement income plans, and its tax treatment is one of the most misunderstood rules in the tax code. The key idea is simple: how much of your benefit is taxed depends on your other income.

If Social Security is your only taxable income — perhaps because your savings are small, or because you’ve already moved most of it into Roth accounts — you’ll likely keep the entire check. As other income rises from IRA withdrawals, a pension, capital gains or Roth conversions, more of your benefit becomes taxable.

Three points worth getting right:

• Up to 85% of your benefit is taxable — not taxed at 85%. At worst, 85% of the check is added to taxable income and then run through the regular brackets. Everyone keeps at least 15% tax-free.
• It phases in gradually. Crossing a threshold doesn’t make your whole benefit taxable overnight.
• Tax on Social Security was not eliminated. The One Big Beautiful Bill Act (OBBBA) created a new senior deduction of up to $6,000 per person age 65 and older. It can lower the tax on your benefits, but the old rules still apply. The deduction begins phasing out above $75,000 of modified adjusted gross income for single filers and $150,000 for joint filers.

We’ll focus on federal tax throughout this article. State rules vary widely, so check how your state treats Social Security and retirement income.

2. Medicare: the IRMAA surcharge hiding in your tax return

Once you’re on Medicare, your income affects more than your tax bill. Higher earners pay an Income-Related Monthly Adjustment Amount (IRMAA) on top of their standard Part B and Part D premiums.

• It starts at $218,000 of MAGI for married couples and $109,000 for single filers. Medicare uses modified adjusted gross income, which is a different figure from your taxable income.
• It looks back two years. Your 2026 premiums are based on your 2024 tax return. A big Roth conversion or asset sale today shows up as a Medicare bill two years from now.
• The surcharge can reach about $6,936 per person per year at the top tier.

IRMAA isn’t always avoidable, and it isn’t always worth avoiding. Sometimes paying a modest surcharge for a year or two — say, during a series of Roth conversions — prevents a larger surcharge every year later when required withdrawals kick in. The goal is to see it coming, not to be surprised by it.

One quick note on long-term care: benefits paid from a tax-qualified long-term care insurance policy are generally tax-free. If you’re paying for care out of an IRA instead, the withdrawals are taxable, and that can push you into higher brackets and IRMAA tiers right when expenses are highest.

3. IRAs and 401(k)s: the tax you’ve postponed is still coming

For most retirees, the bulk of their savings sits in traditional IRAs and 401(k)s. That money has never been taxed, and every dollar that comes out will be. The only real question is when — and at what rate.

Many people plan to leave those accounts alone. The government has other plans. Required minimum distributions (RMDs) begin at age 73 or 75, depending on your birth year. We regularly meet clients who held off on withdrawals for years, only to discover at 73 that their first RMD pushes them into a higher bracket, makes more of their Social Security taxable and triggers IRMAA, all at once.

That’s why we plan taxes over a lifetime, not a single year. The tools we use most often:

Roth conversions. You pay tax now on money moved from a traditional IRA to a Roth IRA. In return, it grows tax-free, comes out tax-free, has no RMDs and passes to heirs tax-free. Conversions raise your tax, IRMAA and Social Security tax in the short run, which is why they feel painful when the bill arrives.
Planned withdrawals. Spending some IRA money earlier, in lower brackets, can shrink future RMDs.
Qualified charitable distributions (QCDs). From age 70½, you can give directly from your IRA to charity. The gift doesn’t count as taxable income, and it can satisfy your RMD.

The principle behind all three: paying somewhat more tax today can mean paying much less over the life of the money.

4. The calculation most couples overlook: gross pay vs. spendable income

Here’s the question we ask every couple approaching retirement: how much do you actually live on? Not what you earn — what reaches your checking account.

A recent couple, longtime viewers of our videos, came in ready to start Roth conversions. Their numbers:

He assumed they needed to replace $95,000 a year. So we asked him to pull up his last pay stub. After payroll taxes, income tax withholding, retirement contributions and benefit deductions, his take-home pay worked out to roughly $54,000 a year. That’s what they had been living on comfortably — and he had no idea it was so much lower than his salary.

That changed everything. Their gap wasn’t $45,000 a year; it was about $4,000 to $5,000.

Here’s how the math looks in retirement:

1. Social Security covers most of it. At about $50,000 a year, very little of their benefit will be taxable, because their other income is modest.
2. Deductions absorb much of the rest. A married couple both 65 or older has a $35,500 standard deduction in 2026, plus up to $12,000 from the new senior deduction.
3. Guaranteed income fills the gap. We placed his 401(k) and her IRA into annuities that together pay about $15,000 a year for as long as either of them lives.
4. The result is a raise. With roughly $65,000 of income, plus some interest on their savings, they’re likely to owe little or no federal income tax. Their spendable income goes from about $54,000 to about $60,000 or more.

Roth conversions weren’t the right move for this couple — their future tax bracket was already near zero. What they needed was an accurate starting number.

The takeaway: spendable income is an after-tax figure. In retirement, payroll taxes and 401(k)/IRA contributions disappear, so most couples need far less gross income than they think. Build your plan from what you actually spend.

Roth accounts and lifetime income annuities strengthen this approach. Roth withdrawals don’t count toward the formula that taxes Social Security, so the more of your other income is tax-free, the less of your benefit is taxed. And an annuity is one of the few tools that can guarantee income for both spouses’ lives.

5. The widow’s tax: what happens when one spouse is gone

The first estate most couples need to plan for isn’t the one they leave their children. It’s the one the surviving spouse inherits.

In the year a spouse dies, the survivor can still file a joint return. After that, they file as single. Their income often barely changes — one Social Security check goes away, but RMDs, pensions and other income stay roughly the same. The brackets, though, are cut roughly in half:

• The 24% bracket tops out at $403,550 for married couples but $201,775 for single filers.
• IRMAA starts at $218,000 for couples but $109,000 for singles.

So the survivor faces higher taxes and higher Medicare premiums at exactly the moment they’re grieving and adjusting to life alone.

Consider a married couple with $150,000 of taxable income. They sit comfortably in the 22% bracket. A planner suggests converting about $250,000 to a Roth, filling up to the top of the 24% bracket. The extra federal tax would be roughly $60,000 — a tough check to write when you could defer it.

But if the husband dies at 80 and his wife lives to 95, she’ll spend 15 years taking RMDs from a larger IRA at single-filer rates. Paying the tax now, at joint rates, and ideally from money outside the IRA, can be one of the most valuable gifts a spouse leaves behind. For a recently widowed client, that final joint-return year can also be a window for a larger conversion.

The tax bomb you leave the kids

Many retirees don’t need their IRA and plan to leave it to their children. Under the 10-year rule, most adult children who inherit an IRA must empty it within 10 years — often during their own peak earning years. Decades of tax deferral can end with your heirs paying the bill at higher rates than you would have.

By contrast, inherited Roth IRAs come out tax-free, and taxable investment accounts generally receive a step-up in cost basis at death, wiping out the built-in capital gain. Which assets you leave to whom matters as much as how much you leave.

6. Your 2026 tax cheat sheet

Keep these numbers handy. Remember that each rule uses a different measure — taxable income for the brackets, MAGI for IRMAA and the senior deduction — so check which one applies before you plan a move.

A note on brackets: landing in the 22% bracket doesn’t mean you pay 22% on everything. A single filer with $80,000 of income pays an effective federal rate well below that, because only the dollars inside each bracket are taxed at that bracket’s rate.

The bottom line

Retirement gives you something you never had while working: control over your tax bill. You choose which accounts fund your paycheck, when to convert, how to give and what to leave behind. Used well, that control can keep thousands of dollars a year in your pocket and protect the spouse who outlives you.

Start with the calculation most couples skip: what you actually spend. Then look at every decision over your whole retirement, not one tax year at a time. Sometimes the smartest move is paying a little more today to avoid paying much more later. Sometimes, as with the couple above, it’s realizing you’re in better shape than you thought.

Have questions about your own situation? Call Cardinal Guide at 919-535-8261, visit CardinalGuide.com, or listen to the Finishing Well podcast.

This article is for educational purposes only and is not tax, legal or investment advice. Figures reflect 2026 federal rules; state taxes vary. Consult a qualified professional before acting on any strategy discussed here.