Retirement Planning Without Taxes: Why It Costs So Much (and How to Fix It)
Retirement planning is one of the biggest financial steps you’ll ever take. But here’s what I see far too often when I review new clients’ plans: the investments are there, but the tax strategy is missing. And that gap can be costly, sometimes in the high six figures over the course of a retirement.
The truth is, retirees overpay in both fees and taxes, not because they picked the wrong investments, but because their advisor never built taxes into the plan. That’s like building a house without considering plumbing. It might look fine at first, but sooner or later, you’ll be dealing with a very expensive problem.
Now, let’s clear up one thing that causes a lot of confusion. The financial industry loves titles like financial advisor, wealth manager, or retirement consultant. What really matters is how that person gets paid. Commission-based advisors make money selling products like annuities or insurance. Variable annuities, for example, often carry stacked ongoing fees that can easily amount to 2%–3% per year (M&E charges alone often around 1.25%) plus potential surrender charges, costs that directly reduce returns.
Then you have percentage-based advisors who charge around 1% of assets under management, still the dominant model in the industry according to MarketWatch and Barron’s. On a $2 million portfolio, that’s $20,000 every year, regardless of market performance. Over twenty years, that adds up to more than half a million dollars, money that could have been compounding for you instead of covering someone else’s business model.
Oh, you also have the Fee-Based advisors who are not only charging you % of assets under management but also selling you commissioned based products.
But here’s the thing, Flat-fee fiduciary advisors work differently. They charge one transparent fee, with no commissions, no sliding percentages, and no hidden incentives. Their advice is tied to your best interests, not to sales contests or the size of your portfolio.
So why does tax planning matter so much? Because taxes are often your single biggest controllable expense in retirement. And unfortunately, most plans don’t integrate them properly, and that’s where tons of money is left on the table.
You see, smart tax planning isn’t just about filing returns or doing Roth conversions. It’s about structuring your income, withdrawals, and investments in a way that maximizes what you keep. Vanguard’s research on “Advisor’s Alpha” shows that the value of skilled financial advice, including tax-efficient withdrawal sequencing, can add roughly 3% in net returns over time. Even Morningstar and other research groups have echoed this finding, showing that a coordinated withdrawal plan across taxable, tax-deferred, and Roth accounts can meaningfully extend portfolio longevity and reduce lifetime taxes.
Take Social Security, for example. Many people don’t realize that up to 85% of Social Security benefits can become taxable depending on total income. Combine that with distributions from IRAs or capital gains, and suddenly your “safe” retirement income can trigger higher taxes and even push you into an unexpected Medicare bracket.
Speaking of Medicare, those brackets, known as IRMAA or income-related monthly adjustment amounts, can be brutal if you’re not proactive. For 2025, the standard Part B premium is $185 per month, but higher-income retirees can face surcharges that add hundreds of dollars per month per person. I’ve seen cases where one poorly timed IRA withdrawal or Roth conversion triggered an IRMAA surcharge lasting an entire year.
The SECURE 2.0 Act brought new opportunities and new traps. It raised the required minimum distribution (RMD) age to 73, giving some retirees extra time to perform Roth conversions in lower tax brackets before mandatory withdrawals begin. But it also reinforced the 10-year rule for inherited IRAs, which forces non-spouse beneficiaries to deplete their inherited retirement accounts within a decade. And without proper planning, that can create a steep, “bigly” tax bill on your family.
And then there’s the 2026 tax cliff. A lot of the provisions of the 2017 Tax Cuts and Jobs Act are set to expire after December 31, 2025. That means higher marginal rates for many households and less room to maneuver on conversions and income strategies. Acting now can help lock in today’s lower brackets before they disappear.
I’ve seen what happens when people wait too long to think about taxes. One couple had $3 million and waited until RMD age to consider Roth conversions and their window to convert in lower brackets got smaller and smaller. The result was paying hundreds of thousands more in taxes than they needed to pay over their lifetime. Another client drew from IRAs first instead of taxable accounts. That decision pushed their income just high enough to trigger a Medicare premium jump that cost them an extra $2,100 year. Mistakes like this don’t look dramatic at first, but over a decade or two, the costs compound. And once you’ve missed the opportunity, you can’t go back and undo it.
This is why flat-fee fiduciary planning works so well. The model aligns retirement and tax strategy without conflicts of interest. At Singh PWM, my approach is simple: one flat annual fee, integrated planning that connects investments, taxes, estate, and cash flow. Every plan includes proactive tax strategies such as Roth conversions, withdrawal sequencing, RMD planning, and tax-loss harvesting, all built on a fiduciary standard that puts your interests first.
The payoff is big. On a $2 million portfolio, the gap between a 1% AUM advisor and a flat-fee model can be roughly $440,000 over 20 years. Add in tax-smart moves like bracket management, avoiding IRMAA cliffs, and estate structuring, and you can easily save another six figures over your lifetime. Meanwhile, fund costs themselves have fallen dramatically. The asset-weighted average fund fee across U.S. mutual funds and ETFs is now about 0.34%, according to Morningstar, which means the biggest savings opportunities today often come from outside the portfolio through better fee and tax management.
And timing really matters. If you’re in your 50s or 60s, every year you delay closing tax gaps, your window narrows. Once RMDs start, once you’ve filed for Social Security, or once your estate documents are finalized, your flexibility is gone. Acting now means you can convert at today’s tax rates before they sunset in 2026, manage Medicare surcharges proactively, and set up your legacy to pass down more efficiently under the SECURE Act rules.
At the end of the day, retirement planning isn’t just about investments. It’s about after-tax income and the legacy you leave behind. Working with a flat-fee fiduciary who builds taxes into every step means you keep more of your money and reduce uncertainty about your future.
Important Disclosures
The information provided herein was obtained from sources believed to be reliable and is believed to be accurate as of the time presented, but it is provided “as is” without any express or implied warranties of any kind. This material is intended for informational and educational purposes only and should not be construed as individualized investment, tax, or legal advice. You should consult with your own qualified investment, tax, or legal advisor before making any decisions based on this material. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. Withdrawal strategies and tax outcomes will vary depending on individual circumstances, account types, tax brackets, and market conditions. No strategy can guarantee success or prevent losses. Investment advisory services are offered through Singh PWM, LLC, a registered investment adviser offering advisory services in the State of Arizona and other jurisdictions where registered or exempted. Singh PWM, LLC is a registered investment advisor offering advisory services in the State(s) of Arizona and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute.