Tax Day — April 15 — is fast approaching. Whether you’ve already filed or are still pulling together your paperwork, this is more than just a time to check boxes and send documents to the IRS. For retirees or those nearing retirement, tax season is a valuable opportunity to take a closer look at your financial picture and find ways to reduce your tax bill, protect your income, and plan smarter for the years ahead.
Here are five practical and powerful tax tips retirees should keep in mind, just in time for Tax Day.
1. Your Investment Strategy May Be Costing You More in Taxes Than You Think
It’s easy to assume that all investing is created equal, but when it comes to taxes, how you invest matters just as much as what you invest in.
If your portfolio leans heavily on growth stocks, mutual funds, or high-frequency trading, you might be triggering capital gains taxes more often than necessary. Even if you’re not actively selling, mutual funds often distribute gains at the end of the year, which adds surprise tax liability.
Instead, consider a more tax-efficient, income-based strategy. Investments like bonds, dividend-paying stocks, preferred shares, and certain annuities can generate reliable income while giving you greater control over how and when taxes are paid. With the right strategy, you can potentially reduce your annual tax burden while keeping your retirement income steady and predictable.
2. Don’t Let RMDs Sneak Up on You
Once you turn 73, the IRS requires you to start taking Required Minimum Distributions (RMDs) from most tax-deferred retirement accounts like traditional IRAs and 401(k)s. These withdrawals are taxed as ordinary income. If not planned for, they can lead to a higher tax bill, even pushing you into a new tax bracket or raising your Medicare premiums.
But here’s the good news: You don’t have to wait until you’re forced to take RMDs to start managing their impact. Many retirees strategically begin withdrawing from their accounts earlier or explore Roth IRA conversions in years when their taxable income is lower. By converting traditional retirement savings into a Roth account, you’ll pay taxes now and avoid RMDs and future taxes on qualified withdrawals.
Planning early can turn RMDs from a tax trap into a manageable part of your overall income strategy.
3. Work With a Pro Who Looks Forward, Not Just Back
A lot of people rely on their CPA to simply “do their taxes.” But filing your return is only part of the picture. To truly minimize your tax burden, especially in retirement, you need a forward-thinking strategy.
That’s where a financial advisor with tax-planning experience can make all the difference. While CPAs are often focused on what happened last year, a proactive advisor looks ahead, helping you adjust your investment mix, time your withdrawals, and use tax-saving strategies that can benefit you for years to come.
The combination of a CPA’s knowledge and an advisor’s forward-focused planning can be a winning formula, especially as tax laws continue to evolve.
4. Even If You Can’t Pay, File On Time
It’s a common misconception that if you can’t pay your full tax bill, you shouldn’t file. In reality, not filing your tax return is far more costly than not paying your full amount owed.
The IRS charges separate penalties for failing to file and failing to pay — and the failure-to-file penalty is harsher. So even if you need more time to pay, it’s essential to file your return or file for an extension by April 15.
If you owe more than you can cover immediately, the IRS offers payment plans and other relief options. Acting now can prevent extra fees and interest, and help you stay in control of your financial situation.
5. Make Tax Time Your Financial Check-Up
Too often, tax season is treated as just another administrative task. But it can be one of the most valuable moments of the year to step back and reassess your financial plan.
Are you paying more in taxes than necessary? Could your investments be better aligned with your current income needs? Are you still using the same strategy you had 10 or 20 years ago, even though your goals have changed?
As you approach or enjoy retirement, your financial priorities evolve. It may be time to shift from a growth-focused approach to an income-first mindset — prioritizing stable income, capital preservation, and tax efficiency. Even small changes in strategy can result in meaningful long-term savings.
Final Thoughts
Tax Day doesn’t have to be a source of stress — it can be a springboard to smarter planning. Whether you’re adjusting to RMDs, exploring income-generating investments, or simply trying to lower your tax bill, the key is being proactive.
This season, take a moment to reflect not just on your taxes, but on how they fit into your bigger financial picture. The right moves today could help you keep more of what you’ve earned, protect your retirement income, and set yourself up for a more secure future.
Need help reviewing your retirement tax strategy? Now’s a great time to start asking questions and making sure every dollar is working as hard as it can for you.
