$6M Retirement Case Study: IRA Drawdown vs Deferring Pension & Social Security to 70
Episode 41
$6M Retirement Case Study: IRA Drawdown vs Deferring Pension & Social Security to 70
Published on July 1st, 2026
Episode Summary
Episode 41 of Retirement Tax Matters reviews a screen-share case study of a married couple at age 63 navigating a $6 million portfolio. With $5 million concentrated in pre-tax traditional IRAs and 401(k) plans alongside $1 million in brokerage and savings accounts, this scenario highlights the decision between taking a combined $85,000 pension and Social Security stream immediately or deferring those guaranteed streams until age 70. Delaying the fixed income benefits may allow the couple to utilize the lower tax brackets during their early retirement years to execute a more aggressive drawdown or strategic Roth conversions from their pre-tax retirement accounts. Modeling the numbers demonstrates that a $300,000 IRA withdrawal during their first full year of retirement may trim future required minimum distributions down to a more manageable range. The tax planning software Garrett uses during this case study helps highlight tax increase thresholds and IRMAA.
Key Tax Planning Questions
Question 1: How big will my RMD on a $5M IRA?
Based on current tax laws, the year your first Required Minimum Distribution (RMD) kicks in depends on the year you were born. For most upcoming retirees, that first mandatory age is going to be either 73 or 75. But here’s the thing…the final amount of that RMD is not settled until December 31st of the year before you have to take it. So if your first RMD is due in 2027, your RMD value is locked in on December 31st, 2026. How your pre-tax IRAs grow or decline up until the very end of that year is what causes your mandatory distribution values to fluctuate year to year.
To figure out what the RMD will be on a $5 million pre-tax retirement account, we have to look at how many years you are away from that age 73 or 75 milestone. The closer you get to those ages, the better our estimate is going to be. If you are age 60 today with a $4 million IRA and you have 15 years before your first RMD at age 75, that account might grow to $5 million, but it could easily be higher or lower depending on market performance. On the flip side, if you are age 72 today in June 2026 and starting your first RMD next year, we can get a pretty accurate estimate of where that number is going to land.
Let's look at some numbers to see how this plays out over time. If you are a single filer turning 70 years old this year in 2026 with a $5 million traditional IRA, and that account continues to earn an average of 5% per year until your first RMD age at 73 in 2029, your first RMD will be approximately $218,000. Now let's look at a 55-year-old saver in 2026 who currently holds a $3.5 million IRA. If that pre-tax account grows at an average of 8% per year until their first RMD at age 75 in 2046, that first required distribution balloons to approximately $663,000!
As you think through the impact of these mandated distributions on your retirement plan, it is important to factor in your specific timeline and your investment risk glidepath as you approach that window. A forward-looking income projection is the best way to get these numbers under control so you aren't surprised when RMD season finally arrives.
Question 2: Should I delay my pension and Social Security to draw down my traditional IRA?
This question sits at the heart of retirement income planning. During your working career, you really don't have a whole lot of control over your actual tax bracket. Whether you were a salaried employee receiving standard annual increases or a business owner whose revenue fluctuated widely from year to year, taxes were usually just an afterthought. The main objective for many was trying to make your gross income as high as possible. However, many soon-to-be retirees find it a little overwhelming when retirement finally appears on the horizon because they realize they can now control the timing and amount of income they receive.
The strategy of delaying your Social Security benefit past your Full Retirement Age of 67 all the way to age 70 means you have a temporary window of lower baseline income. In my experience, this conversation can become very mathematical very quickly, especially for technically minded retirees. For families with pre-tax IRA and 401(k) balances that are very large (over $2M+) having a clear plan for lifetime tax liability is good pre-planning. This strategy often involves delaying Social Security, particularly the higher-earning spouse's benefit if they are older, to let that guaranteed, inflation-protected base grow as large as possible while drawing down the pre-tax accounts first — while protecting the younger surviving spouse with a higher Social Security benefit amount.
However, that approach comes strictly from a place of logic and does not always account for optimizing your life. For example, you might be able to show a lower lifetime tax bill on a spreadsheet by delaying your pension and Social Security checks, but you may be unnecessarily restricting the travel and spending you would normally be doing just to optimize a financial planning equation. Pensions, specifically, often lack the same flexibility or systematic growth features that Social Security provides for delaying. You will want to verify your exact distribution options directly with your pension benefit administrator before making a permanent choice.
If you reach the point in your planning where you realize you have enough resources that money is essentially fungible, and your baseline spending needs are comfortably covered, delaying the higher-earning spouse's Social Security benefit to age 70 can make a lot of sense for households in the $2 million to $8 million range. Pensions are less straight-forward and depend on your company-specific filing options. The key is ensuring that you are factoring in your current lifestyle goals, your future required minimum distributions, and any charitable giving intentions. It is about balancing the math on the screen with the life you actually want to live.
Full Episode Transcript
Adam: Good morning, and welcome to Retirement Tax Matters. I'm Adam Reed. This is Garrett Crawford, our resident CFP® professional. This is the moment that our regular listeners would say, He's going to ask, How are we doing this morning, Garrett? But not this morning. We are throwing a wrench in the game plan.
Garrett: Surprises in store, right?
Adam: Surprises in store. We've been upgrading the studio, doing some different things, and we've been getting a lot of emails and submitted questions through our website, retirementtaxmatters.com. We even had some different people reach out wanting to become clients, and we thought it might be cool to give a look under the hood of what a tax-return-driven financial planner is doing. What does that actually look like?
Garrett: Always a good question.
Adam: What kind of software is that? Because some people are trying to learn and are do-it-yourselfers, some people are looking for an advisor online, and we take clients. We enjoy working with you guys. We wanted to do a case study that might be helpful. We had a listener reach out the other day who said, Here's my situation, and I'd just like more information. We thought this would be a pertinent topic to more than just this person. Sometimes they're very niche, and it's best to respond to that person individually. But sometimes there are cool opportunities to serve a broader group of people. So let's jump into the software. We're going to do some screen sharing, some very futuristic stuff going on here today. Garrett, I'll let you take it from here and let us know what we're doing.
Garrett: Sure. Just for any compliance regulators out there, this is just somebody that was a listener. There are a lot of missing gaps, and I'll talk about that in a second. One thing I thought of, Adam, as you were talking—this is one of those episodes where a video feature is going to be really important, so I'm going to do my best today to describe it as I go through. If you're on the subway, on the train, or in the car listening to this, hopefully, it's not a totally lost episode. One exciting thing is we put these on YouTube, and I think this is a perfect format for that content. But just recently, we switched over on Apple Podcasts to doing videos as well. If you're on the Spotify ecosystem, you might hop over to Apple Podcasts if you wanted to watch this one. Hopefully, we're bringing video back to Spotify soon, but there are some limitations there. I think video will be a really helpful addition here. We'll have plenty of traditional episodes where it's just Adam and I talking. But as an audio tech nerd, this was a fun project to try to figure out how to get all these cameras and the computers set up.
Adam: As a non-AV tech nerd, it was fun to watch Garrett get it all set up. I just sat back and went, Okay, cool, sounds good.
Garrett: Well, if the moment has arrived, how about we just jump into this?
Adam: Let's do it. All right. I'm going to see if we can make some magic happen here.
Garrett: First, I want to go through some of the information about the person that reached out. This is an anonymized person; this is not their real name. Tim and Ann will be our subjects for today. Tim and Ann are married filing jointly, and they are both age 63. They are turning 64 years old in September of 2026, so it is almost birthday time for Tim and Ann. They reached out and said they had $5 million in 401ks and traditional pre-tax IRAs. They also have $1 million in brokerage and savings accounts. They didn't give a breakdown, and we'll talk about that in a second. Between their Social Security checks, both for him and her, and then another pension that they have, the total amount of those guaranteed incomes is $85,000 per year. Tim said he wants to retire at age 65. I don't know how much flexibility Tim has, but he's mentioned 65 as a big number. His question was whether they should consider delaying their Social Security and pension checks to age 70 so that they could get more out of their traditional IRAs and 401ks, those $5 million accounts that are growing.
I got the email initially, and I emailed him back and said, We have a great episode on this called Leveraging the 22% and 24% Tax Brackets for Strategic Roth Conversions. He said that's actually the one he watched, and this is a follow-up question. He's not necessarily mentioning Roth conversions, but instead, he's just saying that they have a lot of money in pre-tax IRA accounts. When you hit these numbers, on the upper side of that $2M to $8M range, diligent savers start to realize that a year of 10% growth on $5 million is half a million dollars. They think, Well, that's not our lifestyle. It starts to ring true that they have to do some thinking on how to get money out of that IRA because it's all taxable.
The question here today is not necessarily how to do Roth conversions up to the top of the 24% tax bracket, it's more: I've got so much IRA money and these large guaranteed pensions. What should I be doing here? Should I be taking those pensions now and letting the IRAs continue to grow to have a lower baseline income, or should I go ahead and delay those guaranteed pension and Social Security amounts until as late as possible and start pulling out money as fast as possible from the IRAs? That's the setup I was given, and that's generally not enough data to build a complete plan. If we could solve a problem like this in a 30-minute podcast, we would be fortune tellers as well as financial planners, because we don't know everything yet.
I'm going to build a couple of assumptions around this case. First, I'm going to assume that Tim and Ann have no debt. It would be striking to me if they have $6 million in savings and they're carrying a mortgage, so we're going to assume that they have zero debt. We're going to assume they are Indiana residents. Then, we're also going to assume they have two kids who are independent, trustworthy, and normal, and the parents are going to leave whatever money's left to their kids 50/50.
I'm also going to assume that the $1 million in brokerage and savings accounts is not all in cash, which is relevant when I go into the tax planning software. I'm going to assume $150,000 in cash at the bank earning no interest, and then the remaining $850,000 is invested in an S&P 500 index fund where they're trying to prioritize long-term capital gains. I'm also going to assume that Tim is a single income earner making $340,000 a year, and that Ann is not working. I'm going to assume that Tim and Ann give to charity, but not enough to itemize. Lastly, they're interested in maxing out the 24% marginal tax bracket. Adam, if you think of something and you want to throw a curveball at me as we go through this scenario, feel free to do that.
Adam: Sounds good.
Garrett: For our listeners, this is all live, and I'm going to put a couple of disclaimers on the outset. One, financial planning is complicated. In fact, I was talking to my dad the other day, and I said, One of my biggest takeaways 13 years into this is that financial planning is a lot more psychological in how we feel about money than it necessarily is a calculator. Today, we're going to be talking like a calculator. Without Tim and Ann sitting here with me, I don't know their current health, life expectancy, or explicit legacy goals, and those are all important factors. I don't know if they think Social Security is going to go bankrupt tomorrow based on those trust fund reports. My disclaimer here is that I'm not trying to solve this question dynamically for them today; I'm trying to give a behind-the-curtains look at a general framework of how I, as a financial planner, would begin to approach this. I'm not a tax preparer, and I am not giving specific tax advice today for Tim and Ann. If they were sitting here, we would be talking to their tax preparer to make sure our numbers are correct and we're not missing anything. I would be reviewing their 2025 tax return to see if there's anything they're not telling me. Whether it's 20 people out there or 50,000 people that end up watching this, you're probably going to be able to nitpick or say, Well, maybe that's not exactly right. That's not the point. I haven't spent 10 hours looking at this. I came up with it a few days ago, typed in a generic scenario, and we're just going to go for it.
Adam: I think people want to see the process, and even go to our website to check out the year-end tax planning checklist to see how you implement that and what it looks like. This shows how we work with families if someone were to become a client. This is what we'd be doing behind the scenes as we prepared for annual reviews. Let us know down in the comments if you like this form of content. Do you like discussing different topics, or do you like the hands-on approach? We're open to feedback. We want to do things that serve you guys well, grow the channel, and reach more people. All right, you ready to do this thing?
Garrett: Yeah, let's do it. Hit the magic button.
Adam: All right, here comes the magic. Boom. Welcome to the MacBook.
Garrett: There you go. Okay, so I use tax planning software called Holistiplan. You can go out and you can Google it. It might be the secret ingredient to what you need to do all of this by yourself, but my feeling is that with tax planning software, once you know enough to use it, you might not need it. This software is how we scale to multiple clients. It's a way for us to easily log in, generate reports, and show things to clients. This software was revolutionary for me six years ago when we first started subscribing to it, and it basically proved to me as a financial planner that working through people's tax returns provided a lot of benefit.
Here's what we're going to do. This is a module the software calls a scenario analysis. I've got a scenario up here where I'm building my prediction for what the income of Tim and Ann might look like at the end of 2026. We always talk about that December 31st deadline. The idea when we're building an income estimate for this year in 2026 is we're trying to help Tim and Ann figure out what their income is going to be at the end of the year so that we can start to answer these questions about what our income looks like now while we're still working, what it is going to look like when we're fully retired, and what about when those pension and Social Securities kick in? For the next 10 or 15 minutes, we're going to step through those three different time periods very briefly, at a 50,000-foot level, and see what income looks like today, at age 70, and then we'll start to consider what RMDs look like.
Tim and Ann, here we go. It's 2026. I've selected that here in the tax planning software. We've indicated that you are married filing jointly. Neither Tim nor Ann are age 65 yet. They're 63 turning 64, so they don't qualify for the additional standard deduction. I'm going to assume they have no dependents right now to keep things simple. Down here, I have input total ordinary income wages for Tim at $340,000 for the year 2026. So we're not talking about retiring this year; it's a full 12 months of work. Tim didn't tell me that's how much he earned; I'm just trying to create a general picture.
For a lot of people, they concentrate on this income level of $340,000, and they forget about the phantom income—that invisible income that comes from their investments. When you're somebody like Tim and Ann that has $150,000 in cash and $850,000 in an index fund, you run into two important income items: interest and dividends. I came up with $4,500 the other day. I took the $150,000 and gave it a standard interest rate return, plus some interest from other items, and came up with $4,500. That is all additional ordinary income, just like their wages. If they're in the 22% or 24% tax bracket, that $4,500 gets added as additional ordinary income.
But then when it comes to dividends, this is one of those items that gets pretty complicated. You can have two different types of dividends: ordinary dividends and qualified dividends. If you could pick between the two, you'd really want qualified dividends. Those are taxed at a lower preferential tax rate. In this case, I'm telling the tax software they have $12,500 of total dividends, of which $12,000 are qualified dividends. If this qualified dividend is very low, we would want to talk about that and see if we could figure out how to get more of their dividend income as qualified income. As they're still working, IRA distributions are kept at zero. They're not pulling any money out. They haven't started those pensions yet, they haven't done any Roth conversions, and they haven't started Social Security.
Then we get down to short-term and long-term capital gains, and this is subjective. Sometimes people in Tim and Ann's situation need to buy a new car or handle an expense, and they might not keep a ton of cash in their bank account outside of their emergency fund. So where do they usually go to get that money? They'll pull it from a brokerage account. It may be they're adding some money to that $850,000 and they pull it out during the year. I'm just saying that they have a $20,000 long-term capital gain that they generated this year from their investments, which is a lower preferential rate, and just a little bit of short-term capital gain.
From there, things get simpler. There's not a lot else going on. They don't have rental properties, farm income, or a separate business. We see total income of $377,250, the same as adjusted gross income. Then we see that they're taking the standard deduction of over $32,200 in 2026. That lowers their taxable income down to $345,000. No alternative minimum tax in this situation, which means of that income, they pay $67,574 in total tax. I'll show you a quick picture here in a second. There is a material part of this that is state taxes. In this tax planning software, we can say they live in Indiana. The software goes through and calculates it, and it says of that money they made, $11,070 would be state taxes. That would be this year. One of the cool things that this tax planning software does—
Adam: In the day and age of YouTube Shorts and Reels, if you're still hanging out with us, you are officially a tax nerd alongside us. But we are getting to the fun stuff now. This is where they take all of the tax return information and package it into charts that are more palatable. Normally, when we're with clients, this is where we're hanging out.
Garrett: This screen is where I hang out, and then this one is where the client hangs out. A lot of times clients give me 50 or 60-page returns and say, I've never looked at this, good luck. They think it's going to be a laborious job for me, but it doesn't take that long with the right tools. Then we look at this page that is a beautiful summary of that 50 or 60-page tax return. A lot of these numbers are exactly what I said: total income of $377,000, they took the standard deduction, and they owe this much. This is one of my favorite parts of this report. It shows you where Tim and Ann are this year income-wise and what tax bracket level they're in. We can see they're in the 24% tax bracket. They've gone through the 10% bracket, the 12% bracket, the 22% bracket, and they're $101,650 into the 24% tax bracket. What's helpful for me as a financial planner is I can see they're $90,000 away from the top of that 24% tax bracket.
I'm going to stop here with that scenario because this covers their working years. We're actually talking about what's coming down the pike. But I wanted to set the stage that Tim and Ann might be this traditional couple already in that 24% bracket. They have a little bit of room. Maybe they should be thinking about a Roth conversion or pulling money out this year because they're older than 59 and a half, utilizing the rule of 55, or 72t distributions. Maybe it doesn't have to wait until they retire. Maybe they start doing something now.
I'm going to go back to this advisor screen, and we're going to bump up in time here. Now we're in 2028. We're in the future. I've changed these numbers a little bit. I've told the software it's 2028 tax time, assuming some inflation growth in the tax brackets. I've got Tim and Ann. We've passed that magical age of 65, so now their standard deduction is a little bit bigger. Big missing item: now that Tim is retired, you don't see that $340,000 of income, but they're still earning interest and dividends off those brokerage accounts. We've got interest and dividends from their brokerage account, and then we've got pensions in here at $21,000, which would be part of a pension that they could take if they wanted to, but let's leave that out for now. We have no pensions, no IRA distributions, and then we've got Social Security in here. We're going to leave this off.
Adam: They went from making pretty good money to beans and rice, it looks like.
Garrett: That's right. So we've got no Social Security, no IRA distributions, and basically, what we're going to find out is if they don't take Social Security, they don't have a lot of income. Again, just double-checking myself, we've got fully retired, no wages, no Social Security decision has been set up yet, and we've got the standard deduction. Then we're going to look at this tax report, and it's going to be pretty small, and we're going to see they barely have any income. Tim and Ann better do something. They better either pull money out of their IRA or they should start Social Security.
Adam: To remind people, we've been through some numbers, but the two thoughts they have are: do we take the guaranteed income earlier and then supplement along the way with our IRAs, or do we take a lot more out of our IRAs while we let those stable fixed incomes grow to higher rates so that we don't end up with as large of RMDs?
Garrett: Yep. So let's do this. I'm going to go back through here and I'm going to add some Social Security income and pension income. We'll do $21,000 and $64,000. I'm taking a guess here at what the distribution is. But if they start Social Security and their pensions, they would actually start it in 2028. I'm doing 2028 because that's the first full year that they're retired. The year 2027, which is when they turn 65, would be a partial year, and I'm trying not to show that. Here in 2028, they've got all of this income, and if we take a look at this, now we're seeing an income report for Tim and Ann. At $67,000, they do have a standard deduction. We're basically in a scenario where we're definitely going to have to add some IRA income, probably to hit the limits of what they need for spending money.
What I want to do next is look at age 70. I'm doing a second scenario where we're bumping out a little bit more to age 70 in the tax year 2032. It's a similar situation; we're now in 2032, married filing jointly, and they're both age 65. We've got the same situation of interest, dividends, total dividends, and we've got pensions. Social Security has grown between those two years because they're waiting until 70. If they wait until age 70, we've got a situation where their income is growing, they've got a higher baseline, and again, we've got a lot of room before we hit the top of the 24% tax bracket.
I want to pause real quick before we go any further into that, and I want to talk about required minimum distributions. We have an episode in our catalog called The Six-Figure RMD, and for Tim and Ann, that's something that we need to be aware of. I go to schwab.com just like anybody else could, and you can type in your date of birth. I'm taking a guess here at September 1st, 1962, typing in a $5 million balance this year, spouse as primary beneficiary, and you can see it says your first RMD at age 75 will be $312,000. I just thought this would be good to show. For the estimated rate of return, I don't know what their investment risk tolerance is, so I'm being conservative here. If they're aggressive investors, it would be higher than this. But if their investments return 4%, this is an important number to know: at age 75, it's $312,897. We can go a few years into the future, and we can see where RMDs, that green distribution line, are getting bigger and bigger and bigger. Let's see where it crosses half a million—at age 91. That's going to take a while, but to go from $312,000 to half a million in RMDs is something that Tim and Ann are rightly thinking about. They might not need all that income; they probably don't. So the question here is whether there is anything we can be doing now to get money out of the IRA account so that the RMDs don't grow so big. I think the answer is yes.
I'm going to go back to this scenario, and it won't take much longer than this. This is where we take a step out from purely math and move into something maybe more behavioral. When it comes to Social Security, it depends on what people think about that. In the grand scheme of things, the survivor benefit is really important. The fact that it's got cost-of-living adjustments added to it each year is a valuable feature. So while it's not the biggest asset for Tim and Ann, it is a significant one. I think there could be a lot of wisdom here to delay Social Security and the pensions until age 70 so that we can get more money out of the IRA. One catch here is because they're both the same age, that means Ann would have to wait and take a spousal benefit until Tim also turns 70. Hopefully, there's an age difference and Ann is younger, but if they were both age 70, perhaps we wouldn't wait until age 70 to file; maybe 67, 68, or 69. The age difference very much matters. But in this example, we're just going to assume that they delay everything until age 70.
Adam: Just to clarify, the thought there is that those fixed income portions are going to grow, and we'll take more out of the IRA so that when they reach 75, that number is a little bit lower, meaning their RMD is lower.
Garrett: Sure. Back here at scenario one for 2028, their first full year of retirement, I have this other view that's pretty cool called the range calculator, and this is what allows Adam and I to figure out how much we could convert to a Roth, or just pull out for living expenses without triggering additional Medicare IRMAA charges. What this chart shows is the tax impact of the next $1,000 of pulling money out or doing a Roth conversion. If you watch my cursor go across the screen, if I go to the $100,000 mark, you can see that down below in that black box. If I convert $100,000 or withdraw $100,000, even though they'd be in the 22% tax bracket, it would actually be a 24.6% net cost because they would be losing that enhanced senior deduction, as the no tax on Social Security phases out as your income grows. If you pulled out $100,000, it would actually be a 24.6% cost.
I think in Tim and Ann's situation, we are not in a position where we just need to pull out $100,000 from a $5 million IRA. I won't go too deep into this, but as a financial planner, I would say there are a lot of subjectively good things you can do in financial planning. You line five of us up, and it might be something different, but there is also objectively wrong financial planning. Objectively wrong financial planning would be converting or withdrawing an amount just over these dotted lines, which represent a Medicare IRMAA threshold penalty. If we decided to pull out $127,000 and triggered that first level of Medicare IRMAA, that's bad financial planning.
For Tim and Ann, when I look at this picture, I really value the 24% tax bracket. The jump between 24% and 32% is huge, and I'm eyeballing this Medicare IRMAA line. It cuts off at $318,000 of additional income, and if somebody said, Let's just max out the 24% tax bracket, you could convert an extra $40,000 out of this person's IRA to a Roth or just pull it out, but you're going to trigger that last level of Medicare IRMAA, which is $6,355 per person per year. If I was talking to Tim and Ann, I would be looking somewhere probably around this $300,000 mark. Split that up however you want to: use as much of that as income for spending needs, and then whatever is left over, we should think about converting to a Roth.
Why don't we do that? I'll go back in here and use $300,000. Let's say Tim pulls out $200,000 just for IRA distributions for spending, and then we can go through and do a $100,000 Roth conversion. If we do that in 2028 when they're fully retired and they don't have that earned income anymore, I can now go back to the tax report, and I bet this is going to look pretty good. We are now back up to a $392,000 total income. Taxes are about the same, and as I look at this picture, you might say, Well, I thought we were going to go to the top of the 24% tax bracket. We could, and that's a discussion.
Adam: Now we're on Medicare.
Garrett: But now we've triggered that extra Medicare IRMAA charge, so I think people can fall into that trap of thinking, I'm just going to convert to the top. I'm actually open to that discussion of doing it, but I want to show you that maybe we don't need to do that.
Adam: Is that chart down below where it shows that? It's the next one, isn't it?
Garrett: Yeah, we have the Medicare Part B and D premiums, and you can see we're right up next to this $410,000. I gave a little bit of room. Maybe dividends and interest are going to be higher, or maybe we take a capital gain. For all you nerds out there like me, you're going to say, Well, how do you know what that IRMAA limit's going to be? We actually don't. It's always two years behind, and if I use this number here, we're estimating out for inflation and guessing that it grows a little bit more. As a financial planner, I try to come in a little bit below those numbers because I don't want something silly barely triggering that next IRMAA level.
Adam: Especially those last couple of levels. The first couple of levels maybe aren't as punitive, but those last couple of levels, you feel them when you hit them.
Garrett: I think so. I've got another scenario over here, and basically, your baseline income is going to be a little bit higher if you wait for Social Security. So your Roth conversions or IRA distributions that you pull out are going to be a little bit smaller. For me, I think that's a great trade-off for them to wait so that they can get more money out or do Roth conversions. It really comes back down to what I started off with: this is not just a math question; it's psychological regarding how much they want left for the kids, and I think that's a really important discussion.
I came away with a result showing that if we did this aggressive strategy where we were pulling out $300,000 a year from age 65 or 66 all the way until the first year of retirement at 73, those RMD numbers would be somewhere more like $150,000 to $180,000 per year instead of over $320,000. If we combine that with maybe some charitable giving they want to do in the future, at the end of the day, it's all going to come down to investment return. I'm using 4%. If it's 8%, 9%, or 10%, we're probably going to end up in that 32% bracket at some point. But if it were me, I'd be leaning, just based on very basic information for Tim and Ann, toward delaying Social Security and the pensions.
Adam: We have a lot of our younger clients who want more 10%, 15%, or 20% years. But then our older clients who've done all the saving and have gotten all the growth are sitting in retirement thinking, Gosh, things just keep growing. I almost wish I had a 5% year so I didn't have these bigger RMDs and bigger pressures. It's funny how our perspective switches as you get more toward trying to spend down and be tax-efficient. It's a good problem to have. I think most people viewing this content, people who are in this target demographic of $2M to $8M in IRAs and brokerage accounts, understand these are good problems that we're trying to solve. But it is funny how people's perspectives switch from those working career years to the retirement years. We're just trying to help optimize those things. I'll link down below all the videos we've ever done for this one. But I think that's a good place to land the plane. Go to the website and submit a question; that's linked down below. Send us an email. We love to interact with you guys and love to answer questions.
Garrett: My favorite part of this is when you're going through tax planning with somebody and they start to say, Okay, I like that, I don't like that, and you can shift the conversation in real time. This is a collaborative effort. I think a lot of people just enjoy seeing the curtain pulled back to see how it works.
Adam: That's one of my favorite stories. When I first got into the industry, I was meeting with this girl. She's crushing it, making a lot of money, and we said, This makes a lot of sense if you're on this track for a while. She said there was nothing on the horizon, no changes coming. She called me three weeks later and said, So I just put an offer in on a $750,000 house, and I'm going to have all my friends with me to rent it out so I have rental income. I thought you said nothing was going to change! But that's life. That's what we do, and it's normal. It's fun to do it on the fly like that. But that's probably good for today. We covered a lot of ground, but feel free to drop questions in the comments. We try to respond to most of them. Submit a question to the website and we'll get you an answer.
Garrett: Okay, sounds great.
Adam: All right. I'm Adam Reed. This is Garrett Crawford. We're Retirement Tax Matters.