When most people think about tax planning, they think about April — or, if they’re a little more proactive, December. They think about this year’s return, this year’s deductions, this year’s bill. That’s not a bad instinct. But it’s an incomplete one.

We think about tax planning differently. We’re not just asking, “How we lower your tax bill this year?” We’re asking, “How do we seek to lower your tax bill over your lifetime?” Those two questions can lead to very different decisions, and sometimes they even point in opposite directions.

That lifetime view doesn’t stop mattering once someone retires — if anything, it matters more. It becomes the framework behind two decisions retirees face every year: which accounts to spend from, and which specific investments to sell to fund that spending.

Why “Lower This Year” Isn’t Always “Lower Overall”

A move that reduces this year’s bill can sometimes increase a future one. Deferring income, avoiding a Roth conversion because it would trigger tax today, or maximizing pre-tax contributions every single year without exception can all feel like wins in the moment. Then years later, a client can find themselves sitting on a large pre-tax balance, facing Required Minimum Distributions, Social Security taxation thresholds, and other income sources all landing in the same tax years — pushing them into a higher bracket than they ever anticipated, with fewer tools left to manage it.

Our job is to look past the current return and ask what the next twenty or thirty years of tax exposure might look like — and to make this year’s decision with that longer view in mind.

Building the Long-Term Picture

This kind of planning starts with a comprehensive financial plan, one that forecasts income and tax exposure across retirement rather than just the year ahead. That typically means mapping out:

• Social Security timing and taxation — when to claim, and how that income interacts with everything else you’ll report.
• Pension income, if applicable, and how it layers on top of other income sources.
• Required Minimum Distributions (RMDs) from retirement accounts, and how the size of those distributions is shaped by decisions made years earlier.
• Other distributions needed to cover living expenses, and which accounts — pre-tax, Roth, or taxable — those withdrawals should come from in a given year.

Once that picture exists, it becomes possible to see where tax brackets might bunch up in the future, and where there’s an opportunity today to smooth that out — whether that’s through strategic Roth conversions, adjusting the pace of pre-tax contributions, or coordinating the timing of when certain income sources begin.

Planning With What We Know Today

We can’t predict what Congress will do with the tax code five, ten, or twenty years from now, and we don’t pretend to. What we can do is build a plan based on current law, reasonable and consistent assumptions about inflation, and a realistic picture of a client’s income sources and goals. As circumstances or the tax code change, the plan is revisited and adjusted — but having a long-term framework in place, rather than reacting year to year, gives clients a much stronger starting point.

Turning the Plan Into Spending Decisions

A lifetime tax plan isn’t just a forecast that sits on a shelf — it’s what actually drives how a client spends in retirement.

Once we know the shape of someone’s future tax picture — when RMDs will start, how Social Security and any pension income will be taxed, what future brackets are likely to look like — that plan helps guide us on which accounts to draw from, and in what order, to cover a client’s living expenses in a given year. Sometimes that means drawing from taxable accounts first to let tax-deferred assets keep growing. Other times, it means intentionally taking more from a pre-tax account in a lower-income year, or drawing down a Roth account when it would otherwise cause a client’s income to spill into a higher bracket. The withdrawal strategy is the plan put into action — it’s how the long-term forecast becomes this year’s decision.

That’s one layer of the decision. The second layer is: once we know which account to draw from, we still have to decide which specific holdings within that account to sell. That decision is driven by a different, more immediate set of factors — current market conditions and the tax characteristics of the specific assets involved. Selling a position that’s down might make sense from a rebalancing standpoint but could also present a tax-loss harvesting opportunity. Selling a highly appreciated position in a taxable account means weighing the resulting capital gain against the benefit of the trade. In short: the tax plan helps us decide which bucket to spend from, and market conditions plus tax lot detail tell us which assets to sell within that bucket.

Keeping these two decisions distinct — but coordinated — is a big part of what ongoing planning looks like in retirement. The lifetime forecast sets the framework; the year-by-year, holding-by-holding decisions are made within it.

A Few of the Opportunities We Look At Each Year

As part of this ongoing process, there are a number of recurring, time-sensitive opportunities we can review with clients, particularly as the calendar year winds down:

• Charitable giving strategies, including Qualified Charitable Distributions for those over 70½ and gifting appreciated securities.
• RMD timing, especially given the phased age changes in recent years for when RMDs begin.
• HSA and FSA contribution and rollover deadlines.
• Retirement account contributions, weighing the near-term deduction of traditional accounts against the long-term benefit of Roth accounts.
• Roth conversion timing, based on where a client sits in their tax bracket this year versus where they’re likely to sit in future years.
• The timing of income and deductions — deciding whether it makes sense to defer income and accelerate deductions, or, in some cases, do the opposite.

Each of these decisions looks a little different depending on where someone is in their financial life and what their broader plan is trying to accomplish. That’s the point — there’s no universal answer, only the answer that fits a particular household’s long-term picture.

As We Approach Year-End

As we approach year-end, we start looking at these opportunities with clients — reviewing where things stand for the current year and where adjustments now might make a meaningful difference down the road.

If you or someone you know might benefit from this kind of long-term strategy, you can schedule a meeting with us.

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Disclosures: Portions of this article were prepared with the assistance of artificial intelligence tools and reviewed by LRIA personnel. This material is provided for educational and informational purposes only and does not constitute individualized investment, tax, or legal advice or a recommendation to buy or sell any security or open any particular account. The strategies described, including Roth conversions, withdrawal sequencing, and tax-loss harvesting, involve trade-offs, may increase current-year taxes, depend on assumptions about future income and tax law that may not hold, and may not be appropriate for every household. LRIA does not prepare tax returns; consult your tax professional before acting.
Leonard Rickey Investment Advisors, P.L.L.C. (LRIA) is an SEC-registered investment adviser. Registration does not imply a certain level of skill or training.