Most people spend decades learning how to save for retirement, but not many specifically learn how to withdraw money from those savings in a tax-efficient way. 

Retirement often introduces a new set of tax questions. IRA withdrawals, Social Security income, investment accounts, and Medicare premiums can all affect how much of your retirement income stays in your pocket. 

As we move through 2026, now is a good time to review strategies that may help reduce taxes over the course of retirement. While every situation is different, a few planning opportunities consistently come up in conversations with retirees: qualified charitable distributions, donor-advised funds, tax-loss harvesting, and Roth conversions. 

Understanding how these strategies work can help you identify questions worth exploring before year-end. 

Why Retirement Tax Planning Matters 

Many retirees are surprised to learn that taxes don’t necessarily become simpler after they stop working. 

Traditional IRAs and 401(k)s eventually generate taxable withdrawals. Investment accounts may create capital gains, dividends, and interest income. Social Security benefits can become partially taxable. Medicare premiums can increase when income rises above certain thresholds. 

When viewed individually, each item may seem manageable. Together, they create opportunities for thoughtful planning. 

You aren’t likely to eliminate taxes altogether, but you can endeavor to make informed decisions that support your retirement goals while reducing unnecessary tax costs over time. 

Qualified Charitable Distributions: Giving Directly From an IRA 

A qualified charitable distribution, or QCD, allows individuals age 70½ or older to transfer money directly from an IRA to a qualified charity. 

Before discussing the strategy itself, there is one important consideration. You should already be charitably inclined. A QCD is not a reason to start giving. It is a tax-efficient way to support causes that are already important to you. 

When completed properly, the distribution goes directly from the IRA to the charity and is not included in your taxable income. 

That creates an interesting opportunity. The money originally went into the IRA on a tax-deferred basis and may have grown for years without current taxation. A QCD allows those dollars to support charitable organizations without creating additional taxable income when distributed. 

For retirees who are already making charitable donations, a QCD can also help satisfy required minimum distributions (RMDs) while reducing taxable income. 

If charitable giving is already part of your retirement plan, it may be worth considering whether a QCD could help accomplish both goals at the same time. 

Donor-Advised Funds: Grouping Charitable Giving for a Larger Deduction 

A donor-advised fund (DAF) approaches charitable giving differently. 

Rather than giving directly from an IRA, a donor-advised fund allows you to make a charitable contribution, receive a tax deduction in that year, and recommend grants to charities over time. 

This strategy can be especially useful for retirees who regularly support charitable organizations but typically claim the standard deduction. 

For example, imagine someone who donates $15,000 each year. That amount alone may not create enough deductions to exceed the standard deduction. 

Instead, they might contribute several years’ worth of planned giving into a donor-advised fund in one year. A $45,000 contribution could create a larger deduction upfront while still allowing donations to be distributed to charities over the next several years. 

The charities receive support, the donor maintains control over future distributions, and the tax deduction occurs when the contribution is made. 

For retirees who already have charitable goals, this approach can create opportunities that may not exist through annual giving alone. 

Tax-Loss Harvesting and Tax-Efficient Investing 

Investment performance gets most of the attention, but taxes can have a meaningful impact on long-term results as well. 

Tax-loss harvesting is a strategy that involves selling investments that have declined in value and using those losses to offset taxable gains. 

The concept is straightforward. Losses generated in one area of a portfolio may help reduce taxes created by gains elsewhere. 

In the past, tax-loss harvesting was often associated with year-end portfolio reviews. Today, some investment approaches create opportunities to identify and harvest losses throughout the year. 

One example is direct indexing, which replicates major indexes through individual securities. While the underlying mechanics can become more advanced, the goal remains the same: identifying opportunities to capture losses while maintaining investment exposure. 

Tax-loss harvesting can also be useful when managing concentrated stock positions. 

Many retirees’ own investments that have appreciated significantly over time. While strong performance is generally welcome, it can also create situations where a single stock represents a large portion of a portfolio. 

Selling those positions all at once may create a significant tax bill. In some situations, harvested losses can help support a gradual diversification strategy. 

The details vary from one situation to another, but understanding the opportunity is often the first step. 

Roth Conversions: Paying Attention to Future Taxes 

Roth conversions continue to be a huge part of tax strategy conversations. 

Sometimes it can sound like everyone should complete a Roth conversion. A better approach is to consider whether a Roth conversion makes sense for your specific situation. 

A Roth conversion moves money from a traditional IRA into a Roth IRA. The amount converted is taxable in the year of the conversion, but future qualified withdrawals from the Roth can be tax-free. 

At first glance, voluntarily paying taxes may seem counterintuitive. 

The reason many retirees consider Roth conversions is that they are looking beyond this year’s tax return. 

Traditional IRAs are subject to RMDs. Those future withdrawals can increase taxable income and may affect Medicare premiums as well. Converting portions of a traditional IRA over time can reduce future IRA balances and potentially reduce future required minimum distributions. 

The value of the strategy depends on several factors, including current tax brackets, future income expectations, retirement goals, and estate planning considerations. 

A Roth conversion analysis often focuses on questions such as: 

• How much can be converted while staying within a desired tax bracket?  

• How might future RMDs change?  

• Could future retirement income become more tax-efficient?  

• How might beneficiaries be affected?  

In a recent planning meeting, a couple was able to convert approximately $66,000 annually while remaining within their target tax bracket. Over time, projected tax savings exceeded $300,000. 

Thoughtful planning can uncover opportunities that may not be obvious at first glance. 

Looking Beyond This Year’s Tax Return 

One of the most common mistakes in tax planning is focusing only on the current year. 

Many retirement tax decisions have effects that stretch across decades. A strategy that increases taxes slightly today may create meaningful savings later. Another strategy that looks appealing this year may create larger tax costs down the road. 

The most effective planning conversations tend to focus on the bigger picture rather than a single tax return. That’s one reason retirement tax planning works best when viewed as an ongoing process rather than a year-end exercise. 

Before the End of 2026 

We’ve covered some strategies for you to consider before the end of the year to optimize your taxes in retirement.  

For retirees who already support charitable causes, QCDs and donor-advised funds may create opportunities to align giving goals with tax planning. 

For those with taxable investment accounts, tax-loss harvesting may help improve after-tax outcomes and support broader investment decisions. 

For retirees with significant IRA balances, a Roth conversion analysis may reveal opportunities to influence future taxes, required minimum distributions, and retirement income planning. 

Last year alone, our team held over 150 tax strategy meetings. The details were different in every case, but often started with: 

• Am I paying more taxes than I need to?  

• Am I missing opportunities that apply to my situation?  

• Is there something I should be reviewing before year-end?  

Those are worthwhile questions, especially while current planning opportunities are still available. 

If you’d like help exploring how these concepts fit into your retirement plan, we offer a complimentary 15-minute call. 

If we can’t answer every question during that conversation, we’ll help point you toward the next steps and resources that make sense for your situation. 

Schedule your complimentary call through our website to get started.