What if trying to save taxes this year is the exact thing that’s gonna cause you to pay more taxes next year? If you’re curious and you’re wondering how that might be, well, you’re gonna wanna stick around because this entire show is gonna be about taxes and how you can be proactive instead of reactive. My name is Anthony Saccaro. I wanna welcome you to today’s Providence Financial Retirement Show, where it truly is all about the income. We are your retirement income source, and this is the place where retirees come for income. Thank you for joining us. Really glad that you’re listening wherever you might be, and we’re gonna spend our time today talking taxes. The core idea behind the show is that tax season is just about over. Well, it is over for most of you. If you’ve filed an extension, then you probably have some things left to do. But most of you, it’s over. And I know what many of you are thinking you just filed and now you’re done.
[00:01:00]
The reality though is this, this is the most important time when decisions actually begin. Your tax return should not be a finish line. It should be the starting point for what you can do this year to save your taxes next year. And there were three common mistakes that seemed to show up year after year that I wanna spend some time talking about. The first mistake is to just set it and forget it, not really be proactive. File your taxes every year, pay your taxes, get your refund, but not really do a lot of planning. Oftentimes, you finish your taxes and you mentally check the box and then you move on. Many of you are not reviewing what actually happened. You’re not necessarily making adjustments for the current year, and you’re missing a lot of opportunities. The wrong time to do tax planning is when the year has ended and now you’re doing tax preparation. You can’t plan at that point because what’s happened has already happened. The time to start
[00:02:00]
planning for taxes and trying to lower your taxes this year and in the future is not after tax season is over.

Here we are in April of 2026 and it’s a great time to start planning for the rest of 2026. But if you’ve mentally checked that box and now you’re ready to move on, then that planning goes out the window. If you are one of the many who actually checked the box mentally and you’re done, there may be some opportunities that you are going to miss and you wouldn’t know that unless you actually take some time to start doing some strategy planning for this year. And again, the time to start doing that is now not when the year is over, and certainly not in the first quarter of next year when you go to file your taxes. But many of you said it and forget it. Just think that everything’s gonna be the same year end and year out, and that’s a mistake. Mistake number two is treating taxes as preparation, not strategy. We touched on this a little bit, but think about your role or your tax preparer or CPA’s role
[00:03:00]
when it comes to the first quarter of the year. They’re working with what already has happened. There’s not a lot they can do to change what’s happened. They’re just trying to make the best decisions with whatever decisions you had made in the previous year. The focus becomes more on preparation, not strategic planning. Tax preparation is backward looking. Tax planning is forward looking, and even if your CPA is a fantastic CPA and when they’re doing your tax preparation, even if they notice something that you could be doing, a lot of times during tax season they just don’t have time. They don’t have time to discuss it, time to point it out, and it gets forgotten. I’m gonna recommend that after tax season is over right about now, you get back with your CPA and start asking them questions. What can you do that’s gonna save you taxes? Not only now, but in the long run. And that takes me to the third mistake that I’ve often seen, and that is short term thinking with a year by year focus, as opposed to
[00:04:00]
long-term thinking. Most people are trying to figure out how do you save taxes this year? But what if you were to ask the question, how do you save taxes over your lifetime? That’s gonna change what you do this year. You might wind up paying more taxes in the short run, but it would be worth it if it’s gonna save you a lot more taxes in the long run. If you simply have a tax preparation mindset, then you’re not thinking about how future RMDs or your future tax brackets or social security is gonna be taxed. That’s all long run thinking. That’s not short term thinking, and the question is, do you just wanna minimize taxes this year at the expense of possibly paying a lot more taxes over your lifetime, or would you rather put yourself in a position to save taxes over your lifetime, even if it costs you a little more this year? And I know from a quarter century of experience of working with retirees that most of you are just focused on this year, how do we save taxes this year?
[00:05:00]
Most people aren’t focused on how do we save the most amount of taxes we can over our lifetime, but that’s exactly what we wanna focus on here at Providence Financial, not just this year, but the lifetime of taxes. Mistake number one then is just setting it and forgetting it. Mistake number two is treating taxes as preparation, not strategy, and mistake number three then is short-term tax thinking, not long-term. And here on the Providence Financial Retirement Show, we always focus on trying to be proactive with taxes and not reactive because you are a listener of this show. We’ve put together a resource for you. It’s an animated video that explains some proactive tax strategies, and that’s what it’s called, proactive tax strategies. It’s a fun little video to watch. It’s only seven or eight minutes, but it’s very powerful and it is animated, so you’re gonna enjoy it, but you’re also gonna learn about the proactive tax saving strategies and things you can do that you’re probably not thinking of.
[00:06:00]
If you’d like to watch this video, I’ll send it to you absolutely free of charge. It’ll show up in your inbox shortly. You have to ask for it though, and you can do that by going to providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your information and we’ll email this video to you. No cost, no obligation, just information. To get your free video about proactive tax saving strategies, go to providencefinancialradio.com/video and we’ll get it right out. I’m Anthony Saccaro. Thank you for taking time outta your day to join us for the Providence Financial Retirement Show. And we just talked about three of the most common mistakes that I’ve seen people make right after filing their taxes. And that’s what our entire show is talking about today, how you can be proactive with your taxes and not reactive. And I want to get into one of the biggest real world examples of that. This shows up immediately in retirement when you start taking
[00:07:00]
income. Most retirees want things to be simple. So what do they do? They pick an account, they set up their monthly withdrawals, and they just let it run. And on the surface, it sounds responsible and it feels organized and easy. The problem though is that by default, most people are pulling from their IRAs and their 401Ks first. Why? Because usually that’s the largest bucket. It’s also very easy to access. The challenge though is that every dollar coming out is fully taxable as ordinary income. When you take this income and you stack it on top of social security, if you’re already taking it and you stack it on top of a pension or rental income or other income sources that you have, the result might be that it puts you in a higher tax bracket than necessary. It may even cause some of your social security, more of your social security to be taxed than necessary. And the idea is that you might be creating taxes that you don’t necessarily
[00:08:00]
need to pay. And we have a listener question that really fits in well with what we’re talking about here, and it comes from Joe in Irvine and he wrote in this. My wife and I retired last year, and we’ve just been taking a set monthly amount out of our IRA because it seemed like the easiest thing to do. Are we overthinking this or could that actually be a problem from a tax standpoint? Well, first of all, that’s exactly what most people do, and you are not alone. There’s just why we’re spending some time talking about it. It’s not wrong to do that, but oftentimes it creates inefficiency. You’re turning your entire income stream into taxable income, and that may be causing you to have to pay more than necessary. You might be pushing yourself into a higher bracket, or as I mentioned a minute ago, it may cause you to have to pay more on your social security tax than necessary, and it may even affect your Medicare Part B premiums because what you pay for Medicare Part B every year depends on what your income is.
[00:09:00]
And Joe, if all your money is in tax deferred IRA account, then you probably have no choice. You’re really stuck because that’s the only source of income that you have. But if you are like most people and you’ve got some tax deferred, maybe you’ve got some taxable account, maybe you have a Roth IRA, the best option usually is to develop a strategy that will allow you to blend income from those different buckets. This allows you to control how much actually shows up as taxable income each year. A key thought here is that it’s not just how much income you take, but it’s where that income comes from that determines how much you actually pay in taxes. So Joe, I certainly hope that gives you some things to think about. Simple doesn’t often equal efficient. If you wanna be efficient, then it’s usually not best to just take everything from your pre-tax retirement accounts. Thank you, Joe, for taking the time to write in that question.
[00:10:00]
And if you identify with Joe and you’re in the same situation, you’re just taking money from your pre-tax retirement accounts without a coordinated strategy, and you understand now why that may not be the best way to go about it, well you’re gonna want to get a copy of my book, More Life Than Money, because I talk a lot in there about how to save taxes and things you can do to be proactive instead of reactive. I’ll send you More Life Than Money absolutely free of charge, but you do have to request it, and you can do that by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and we’ll send you a free copy of More Life Than Money right out to your doorstep. To claim your free copy of More Life Than Money, just go to providencefinancialradio.com/book and we will get it right out. And not only will you learn how to be more tax efficient and proactive with your taxes in the future, but you’ll also enjoy reading about some of the other more common mistakes that I’ve seen retirees make over my career as well.
[00:11:00]
Providencefinancialradio.com/book is where you need to go to get it. Thank you for taking time outta your day to join us for the Providence Financial Retirement Show. We are your retirement income source and this is the place where retirees come for income. We’re spending our time together today talking about taxes and how to be proactive instead of reactive. We’ve already talked about the three biggest mistakes that I see people make when it comes to taxes, and now we just talked about taking income from the wrong place and how it can actually increase your taxes. I want to take a few minutes and talk about something bigger than what you’re going to pay or what you’re gonna save in taxes this year. It’s not just how you’re taking income today, but I want to talk about what’s building in the background. Most of you have a large
[00:12:00]
portion of your money in IRAs and 401Ks, and you’ve been told for years that you’re saving taxes. You are deferring taxes, but one thing you’ve never been told is that you are eliminating taxes, and that’s because you’re not. When you put money into a retirement account, you’re just postponing the taxes. And in many situations you might be postponing them so much to where it’s gonna put yourself in a worse situation down the road. I don’t wanna talk about a tax time bomb concept that I’ve talked about for many years, and that is this. Every time you put money into a pre-tax retirement account where you save taxes this year, that money has never been taxed. And that ticking tax time bomb means that at some point down the road, every dollar you take out is going to be taxable, and the longer you let it grow tax deferred, the larger the balance is gonna be and the larger the future
[00:13:00]
withdrawals and the more taxes you’re going to have to pay and whether or not you even need the money, many of you might be planning on never needing it, just leaving it to the next generation. The bad news about that idea though is that the government wants to get their tax dollars at some point. So they don’t just let you accumulate tax deferred for as long as you want for the end of your life. They actually force you to start taking distributions through required minimum distributions. So it’s not really up to you whether or not you wanna just let it sit there because they don’t allow you to. You don’t have a choice of whether to take the income or not. You don’t have the choice of how much to take, and that’s true even if you don’t need or you don’t want the income. The result of required minimum distributions might be that it puts your income into a higher tax bracket, and it may even cause more of your social security to become taxable along with more of your Medicare Part B premiums.
[00:14:00]
The idea here is that if you have this ticking tax time bomb and you’ve just done what so many of you have done, you’ve built up your pre-tax retirement accounts because you’re trying to save money each and every year without really thinking about the long run, eventually you may very well lose control of your tax situation later down the road. This goes back to exactly what we talked about earlier. One of the biggest mistakes we’ve already discussed is thinking taxes only on a year by year basis, not thinking about taxes over the long run. By continuing to contribute to your 401Ks and your IRA accounts, you’re gonna save a little taxes along the way, but you’re gonna create a much bigger tax issue later. That ticking tax time bomb that we’re talking about. This time bomb doesn’t show up immediately. It builds quietly over time. That’s why many of you are i

What if trying to save taxes this year is the exact thing that’s gonna cause you to pay more taxes next year? If you’re curious and you’re wondering how that might be, well, you’re gonna wanna stick around because this entire show is gonna be about taxes and how you can be proactive instead of reactive. My name is Anthony Saccaro. I wanna welcome you to today’s Providence Financial Retirement Show, where it truly is all about the income. We are your retirement income source, and this is the place where retirees come for income. Thank you for joining us. Really glad that you’re listening wherever you might be, and we’re gonna spend our time today talking taxes. The core idea behind the show is that tax season is just about over. Well, it is over for most of you. If you’ve filed an extension, then you probably have some things left to do. But most of you, it’s over. And I know what many of you are thinking you just filed and now you’re done.
[00:01:00]
The reality though is this, this is the most important time when decisions actually begin. Your tax return should not be a finish line. It should be the starting point for what you can do this year to save your taxes next year. And there were three common mistakes that seemed to show up year after year that I wanna spend some time talking about. The first mistake is to just set it and forget it, not really be proactive. File your taxes every year, pay your taxes, get your refund, but not really do a lot of planning. Oftentimes, you finish your taxes and you mentally check the box and then you move on. Many of you are not reviewing what actually happened. You’re not necessarily making adjustments for the current year, and you’re missing a lot of opportunities. The wrong time to do tax planning is when the year has ended and now you’re doing tax preparation. You can’t plan at that point because what’s happened has already happened. The time to start
[00:02:00]
planning for taxes and trying to lower your taxes this year and in the future is not after tax season is over.

Here we are in April of 2026 and it’s a great time to start planning for the rest of 2026. But if you’ve mentally checked that box and now you’re ready to move on, then that planning goes out the window. If you are one of the many who actually checked the box mentally and you’re done, there may be some opportunities that you are going to miss and you wouldn’t know that unless you actually take some time to start doing some strategy planning for this year. And again, the time to start doing that is now not when the year is over, and certainly not in the first quarter of next year when you go to file your taxes. But many of you said it and forget it. Just think that everything’s gonna be the same year end and year out, and that’s a mistake. Mistake number two is treating taxes as preparation, not strategy. We touched on this a little bit, but think about your role or your tax preparer or CPA’s role
[00:03:00]
when it comes to the first quarter of the year. They’re working with what already has happened. There’s not a lot they can do to change what’s happened. They’re just trying to make the best decisions with whatever decisions you had made in the previous year. The focus becomes more on preparation, not strategic planning. Tax preparation is backward looking. Tax planning is forward looking, and even if your CPA is a fantastic CPA and when they’re doing your tax preparation, even if they notice something that you could be doing, a lot of times during tax season they just don’t have time. They don’t have time to discuss it, time to point it out, and it gets forgotten. I’m gonna recommend that after tax season is over right about now, you get back with your CPA and start asking them questions. What can you do that’s gonna save you taxes? Not only now, but in the long run. And that takes me to the third mistake that I’ve often seen, and that is short term thinking with a year by year focus, as opposed to
[00:04:00]
long-term thinking. Most people are trying to figure out how do you save taxes this year? But what if you were to ask the question, how do you save taxes over your lifetime? That’s gonna change what you do this year. You might wind up paying more taxes in the short run, but it would be worth it if it’s gonna save you a lot more taxes in the long run. If you simply have a tax preparation mindset, then you’re not thinking about how future RMDs or your future tax brackets or social security is gonna be taxed. That’s all long run thinking. That’s not short term thinking, and the question is, do you just wanna minimize taxes this year at the expense of possibly paying a lot more taxes over your lifetime, or would you rather put yourself in a position to save taxes over your lifetime, even if it costs you a little more this year? And I know from a quarter century of experience of working with retirees that most of you are just focused on this year, how do we save taxes this year?
[00:05:00]
Most people aren’t focused on how do we save the most amount of taxes we can over our lifetime, but that’s exactly what we wanna focus on here at Providence Financial, not just this year, but the lifetime of taxes. Mistake number one then is just setting it and forgetting it. Mistake number two is treating taxes as preparation, not strategy, and mistake number three then is short-term tax thinking, not long-term. And here on the Providence Financial Retirement Show, we always focus on trying to be proactive with taxes and not reactive because you are a listener of this show. We’ve put together a resource for you. It’s an animated video that explains some proactive tax strategies, and that’s what it’s called, proactive tax strategies. It’s a fun little video to watch. It’s only seven or eight minutes, but it’s very powerful and it is animated, so you’re gonna enjoy it, but you’re also gonna learn about the proactive tax saving strategies and things you can do that you’re probably not thinking of.
[00:06:00]
If you’d like to watch this video, I’ll send it to you absolutely free of charge. It’ll show up in your inbox shortly. You have to ask for it though, and you can do that by going to providencefinancialradio.com/video. Again, it’s providencefinancialradio.com/video. Leave us your information and we’ll email this video to you. No cost, no obligation, just information. To get your free video about proactive tax saving strategies, go to providencefinancialradio.com/video and we’ll get it right out. I’m Anthony Saccaro. Thank you for taking time outta your day to join us for the Providence Financial Retirement Show. And we just talked about three of the most common mistakes that I’ve seen people make right after filing their taxes. And that’s what our entire show is talking about today, how you can be proactive with your taxes and not reactive. And I want to get into one of the biggest real world examples of that. This shows up immediately in retirement when you start taking
[00:07:00]
income. Most retirees want things to be simple. So what do they do? They pick an account, they set up their monthly withdrawals, and they just let it run. And on the surface, it sounds responsible and it feels organized and easy. The problem though is that by default, most people are pulling from their IRAs and their 401Ks first. Why? Because usually that’s the largest bucket. It’s also very easy to access. The challenge though is that every dollar coming out is fully taxable as ordinary income. When you take this income and you stack it on top of social security, if you’re already taking it and you stack it on top of a pension or rental income or other income sources that you have, the result might be that it puts you in a higher tax bracket than necessary. It may even cause some of your social security, more of your social security to be taxed than necessary. And the idea is that you might be creating taxes that you don’t necessarily
[00:08:00]
need to pay. And we have a listener question that really fits in well with what we’re talking about here, and it comes from Joe in Irvine and he wrote in this. My wife and I retired last year, and we’ve just been taking a set monthly amount out of our IRA because it seemed like the easiest thing to do. Are we overthinking this or could that actually be a problem from a tax standpoint? Well, first of all, that’s exactly what most people do, and you are not alone. There’s just why we’re spending some time talking about it. It’s not wrong to do that, but oftentimes it creates inefficiency. You’re turning your entire income stream into taxable income, and that may be causing you to have to pay more than necessary. You might be pushing yourself into a higher bracket, or as I mentioned a minute ago, it may cause you to have to pay more on your social security tax than necessary, and it may even affect your Medicare Part B premiums because what you pay for Medicare Part B every year depends on what your income is.
[00:09:00]
And Joe, if all your money is in tax deferred IRA account, then you probably have no choice. You’re really stuck because that’s the only source of income that you have. But if you are like most people and you’ve got some tax deferred, maybe you’ve got some taxable account, maybe you have a Roth IRA, the best option usually is to develop a strategy that will allow you to blend income from those different buckets. This allows you to control how much actually shows up as taxable income each year. A key thought here is that it’s not just how much income you take, but it’s where that income comes from that determines how much you actually pay in taxes. So Joe, I certainly hope that gives you some things to think about. Simple doesn’t often equal efficient. If you wanna be efficient, then it’s usually not best to just take everything from your pre-tax retirement accounts. Thank you, Joe, for taking the time to write in that question.
[00:10:00]
And if you identify with Joe and you’re in the same situation, you’re just taking money from your pre-tax retirement accounts without a coordinated strategy, and you understand now why that may not be the best way to go about it, well you’re gonna want to get a copy of my book, More Life Than Money, because I talk a lot in there about how to save taxes and things you can do to be proactive instead of reactive. I’ll send you More Life Than Money absolutely free of charge, but you do have to request it, and you can do that by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and we’ll send you a free copy of More Life Than Money right out to your doorstep. To claim your free copy of More Life Than Money, just go to providencefinancialradio.com/book and we will get it right out. And not only will you learn how to be more tax efficient and proactive with your taxes in the future, but you’ll also enjoy reading about some of the other more common mistakes that I’ve seen retirees make over my career as well.
[00:11:00]
Providencefinancialradio.com/book is where you need to go to get it. Thank you for taking time outta your day to join us for the Providence Financial Retirement Show. We are your retirement income source and this is the place where retirees come for income. We’re spending our time together today talking about taxes and how to be proactive instead of reactive. We’ve already talked about the three biggest mistakes that I see people make when it comes to taxes, and now we just talked about taking income from the wrong place and how it can actually increase your taxes. I want to take a few minutes and talk about something bigger than what you’re going to pay or what you’re gonna save in taxes this year. It’s not just how you’re taking income today, but I want to talk about what’s building in the background. Most of you have a large
[00:12:00]
portion of your money in IRAs and 401Ks, and you’ve been told for years that you’re saving taxes. You are deferring taxes, but one thing you’ve never been told is that you are eliminating taxes, and that’s because you’re not. When you put money into a retirement account, you’re just postponing the taxes. And in many situations you might be postponing them so much to where it’s gonna put yourself in a worse situation down the road. I don’t wanna talk about a tax time bomb concept that I’ve talked about for many years, and that is this. Every time you put money into a pre-tax retirement account where you save taxes this year, that money has never been taxed. And that ticking tax time bomb means that at some point down the road, every dollar you take out is going to be taxable, and the longer you let it grow tax deferred, the larger the balance is gonna be and the larger the future
[00:13:00]
withdrawals and the more taxes you’re going to have to pay and whether or not you even need the money, many of you might be planning on never needing it, just leaving it to the next generation. The bad news about that idea though is that the government wants to get their tax dollars at some point. So they don’t just let you accumulate tax deferred for as long as you want for the end of your life. They actually force you to start taking distributions through required minimum distributions. So it’s not really up to you whether or not you wanna just let it sit there because they don’t allow you to. You don’t have a choice of whether to take the income or not. You don’t have the choice of how much to take, and that’s true even if you don’t need or you don’t want the income. The result of required minimum distributions might be that it puts your income into a higher tax bracket, and it may even cause more of your social security to become taxable along with more of your Medicare Part B premiums.
[00:14:00]
The idea here is that if you have this ticking tax time bomb and you’ve just done what so many of you have done, you’ve built up your pre-tax retirement accounts because you’re trying to save money each and every year without really thinking about the long run, eventually you may very well lose control of your tax situation later down the road. This goes back to exactly what we talked about earlier. One of the biggest mistakes we’ve already discussed is thinking taxes only on a year by year basis, not thinking about taxes over the long run. By continuing to contribute to your 401Ks and your IRA accounts, you’re gonna save a little taxes along the way, but you’re gonna create a much bigger tax issue later. That ticking tax time bomb that we’re talking about. This time bomb doesn’t show up immediately. It builds quietly over time. That’s why many of you are in

Many of you might be paying more in taxes than you have to be just because you’re taking your income from the wrong place. And now we’re in the middle of talking about that ticking tax time bomb. Many of you have built up your pre-tax retirement accounts and you’re just pushing taxes down the road. It’s not tax free, it’s tax deferred. And what seems like a smart move now, because you’re gonna save taxes this year, might have huge tax implications down the road for the rest of your life.

And I wanna make sure that you do everything you can to avoid that. So the question then is how do you deal with that tax problem before it actually shows up? Because once your required minimum distribution starts, your flexibility is just about gone. And yet one of the most effective
[00:18:00]
tools to help you manage your taxes, if you correctly, it’s something that you’ve probably heard of.

And these are Roth conversions. A Roth conversion is when you move money from a pre-tax retirement account, like an IRA or 401k or 403B or something like that into a tax-free Roth IRA. When you do that, you’re gonna pay the taxes now, but that money that you transfer into a Roth IRA is gonna grow tax free forever. It’s gonna give you a lot more flexibility down the road, the ability to control your taxes that you don’t have now. And it’s not about avoiding taxes, but it is about controlling when and how you’re going to pay them. By having a Roth IRA and by doing Roth conversions, you’re gonna get the ability to pay taxes on your terms and not the IRS’s terms.

And if you don’t do that, then the IRS is gonna decide when you’re going to have to
[00:19:00]
make withdrawals and how much you’re gonna have to pay in tax. This ties nicely into what we’ve been talking about this entire show, and that is that the time to do tax strategies is not in the first quarter of next year when there’s nothing you can do about it.

But tax season is over right now, and the time to start thinking, the time to start planning is right now at this point, you already know what your income’s gonna be. You know what your tax bracket’s gonna be, and it’s the perfect time to evaluate how much room do you have in your current bracket to be able to do Roth conversions with.

And you don’t have to convert everything all at once. Most of the times that doesn’t make sense to do, but you can convert portions over multiple years.
PFR-Podcast-20260411_BeingProactiveAboutTaxes.docx
Maybe you set up a five year plan or a 10 year plan or a plan that will take you all the way to required minimum distribution age. But the goal is to reduce future RMDs and to reduce your future taxable income.

And this is long-term planning. This is not gonna save you taxes this year. As a
[00:20:00]
matter of fact, when you do a Roth conversion, you’re gonna pay more tax this year than you otherwise would. But for the long run, it’s gonna be very strategic and you’ll most likely save a lot of taxes over your lifetime at the expense of maybe paying a little more tax in the years that you’re doing the Roth conversions.

It’s really a short-term pain for a long-term gain, and that goes against what society tries to do. As I mentioned earlier, we’re in an instant gratification society where we try to save taxes this year because that’s when we have to pay, but that has an expense, and the expense is that you’re gonna wind up paying a lot more taxes over your lifetime than if you were to pay a little bit of tax each year you do conversions and then save a lot of tax down the road. Many of you have heard of Roth conversions, but once you find out that it’s gonna cause you to have to pay more taxes this year, you’ve kind of poo-pooed the idea. And that’s a mistake. That’s a mistake that could potentially cost you a lot of taxes over the rest of your life by not seriously considering conversions and making them a part of your tax strategy.

If you’re not sure how to do that though, or you wanna learn a little more, well, in my book, More Life Than Money, I’ve written a lot about Roth conversions and how they might be able to help you. Plus, I wrote about some of the other common mistakes that I’ve seen retirees make over my career as well too.

I wanna send you More Life Than Money. Absolutely no cost, no obligation, but we do have to know that you want it, and you can let us know that by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and we’ll go ahead and get a free copy of my Amazon number one bestselling book, More Life Than Money. We’ll get it right out to you. You’ll have it in a few days. To get your free copy of More Life Than Money, go to providencefinancialradio.com/book and leave us your information. We’ll get it right out, and I know you’re gonna learn something by reading it. We’ve just discussed that many of you have a ticking tax time bomb because you’ve
[00:22:00]
been saving all of your money in tax deferred retirement accounts, kicking the tax can down the trail. There’s more to it than that. There’s another aspect of this ticking tax time bomb that you might not be considering, but we’re gonna consider it right here on the Providence Financial Retirement Show.

Thank you for staying with us. You’re listening to the Providence Financial Retirement Show. I’m Anthony Saccaro. Really glad that you’re joining us today, wherever you might be. We are your retirement income source, and this is the place where retirees come for income. We’re spending our time together today talking about taxes.

So far we’ve talked about the three biggest mistakes that I’ve seen people make when it comes to taxes. We’ve also talked about why taking your income from the wrong place can cause you to pay more taxes than necessary. And
[00:23:00]
we’ve also covered this ticking tax bomb concept, and that is that many of you have overfunded your pre-tax retirement accounts, saving taxes in the year that you make the contributions, but kicking that tax issue down the road.

And we also just talked about Roth conversions as a potential longer term strategy to help mitigate those tax issues. Where it starts to get a little more complicated though is when you layer in Social Security, because now your income doesn’t just affect your current tax bracket. It can actually determine how much of your social security is gonna get taxed.

I know many of you believe that your social security is tax free, and that’s true as long as social security is your only source of income. But when you layer in a pension income or you layer in rental income, or you layer in required minimum distributions, what you might find out the hard way is that up to 85% of your social security benefits can actually be taxed.

It’s based on something called
[00:24:00]
provisional income, and this includes all of your income sources. That even means your IRA minimum distributions. All of your other income plus it also includes a portion of your Social Security income, and if your provisional income reaches certain income levels, then up to 85% of your social security could actually be taxed.

It doesn’t mean that 85% of your social security is the tax. A lot of you have thought that it actually means that 85% of your social security will be included on your tax return as income, and you’ll have to pay tax on that example, if your social security income is $50,000 and you’re in the 25% tax bracket, you might have to pay $12,500 of tax on that $50,000 of Social security.

For many of you, your social security is your only income and you’ve never had to pay tax on it at all. But then when you turn RMD Age, now all of a
[00:25:00]
sudden you have to start taking RMDs. And not only might that cause you to pay more tax than you’re used to because you’ve gotta pay tax on the RMDs. But it may also cause you to have to pay tax on your social security, which you might not be used to.

Maybe you’ve never paid any tax on Social Security. What it really does is it creates a chain reaction. The first part of that chain reaction might start with required minimum distributions. When you turn RMD Age, you have to start taking withdrawals, and that’s automatically gonna increase your tax because you’re gonna have to pay taxes on the withdrawals.

But it may also push you into a higher tax bracket. That’s chain reaction number one. If you’re in a higher tax bracket, that may also cause you to have to pay more in Medicare Part B premiums. That’s chain reaction number two, and it also may cause you to have to pay more in Social Security tax. That’s chain reaction number three.

And this is all happening behind the scenes. And if you haven’t really thought about it this way and you haven’t done any strategic planning, then you’re
[00:26:00]
gonna find out the hard way that this chain reaction is gonna occur when you have to start taking your required minimum distributions, and by then it’s too late.

There’s really not a lot you can do. There are some things, but it’s certainly not as advantageous as if you were to be proactive instead of reactive. This goes right back to what we talked about earlier. Where your income is coming from and how it’s structured is going to determine whether or not you are in a tax efficient situation or whether you have to pay more tax than necessary.

If you don’t do any planning at all, or if you do poor planning, it’s probably gonna create unnecessary taxation for you. But good planning helps you control how your income shows up. You might be able to reduce your IRA withdrawals through Roth conversions. You might be able to use other income sources, and you can also coordinate the timing of when you take Social Security benefits.

But the goal is to keep more of your benefits and to reduce overall
[00:27:00]
taxation over time. But it takes strategic planning to do that, and it takes being proactive, not just doing what the government tells you to by being reactive, but actually coming up with a plan. Doing Roth conversions is just one proactive strategy, but there are many proactive strategies that you can do.

If you want to learn more about what some of these other strategies are, just because we don’t have time to cover them in this show, well that’s exactly why we created this free animated video that I’m gonna offer to email to you absolutely free of charge. You’ll learn about some of the other proactive tax saving strategies, so you can take the IRS out of the driver’s seat and you can start driving your tax situation instead of just being reactive.

If you’d like to watch this video, it’s really fun. It’s only seven or eight minutes, but it’s pretty powerful and it’s animated. That’s why we made it animated so that it would be fun to watch. But you’ll also learn how to be proactive instead
[00:28:00]
of being reactive when it comes to your taxes. To get your video, all you need to do is go to providencefinancialradio.com/video.

Again, it’s providencefinancialradio.com/video. Leave us your information and we’ll email it to you absolutely free, no cost, no obligation, just information about how to be more proactive with your taxes because this is the time to do that. Just go to providencefinancialradio.com/video.

Give us your information and we will get that video emailed over to you shortly. I’m Anthony Saccaro. Thank you for joining us today for the Providence Financial Retirement Show. We’re spending our time together talking about taxes and why it’s so important to be proactive instead of being reactive.

We’ve already talked about some of the biggest mistakes that I’ve seen retirees make over my career, along with why it is so important that you take your withdrawals from the right account. And we’ve talked about Roth conversions as a way of being very proactive so you can actually control your own tax destiny and not let the IRS control it.

And now the question becomes, if your income
[00:29:00]
affects your taxes this much and you’ve got money in different types of accounts, how do you actually decide where to take the income from? If you’re like most retirees and all of your money is in tax deferred accounts, How do you actually decide where to take the income from? If you’re like most retirees and all of your money is in tax deferred accounts, well you might not have a choice. If you need income, you’ve gotta take it from these tax deferred accounts because that’s where all your money is. But many of you have really three different tax buckets. You’ve got your tax deferred accounts, which would be things like your IRAs and 401Ks and other type of pre-tax retirement accounts. You’ve got your taxable accounts. These would be like your typical brokerage accounts, and then you’ve got your tax free accounts, and that would be your Roth IRA if you have one at all.
PFR-Podcast-20260411_BeingProactiveAboutTaxes.docx
The mistake is treating all of them the same. Not all income from these accounts is gonna be taxed the same. And where you decide to make withdrawals from is directly going to impact your tax bill. And Steve from Carlsbad wrote us a question that ties in nicely with our conversation here, so I’m gonna take time to answer it.
[00:30:00]
Steve, here’s the question. Between my wife and I, we’ve got money in IRAs and also in a brokerage account. When we need income, how do we decide which account to pull from first? And that’s exactly the right question to be asking. So thank you, Steve, for taking the time to write in that question. The answer is there is no one size fits all, but there is strategy. What most people do is they drain one account first, and that might be the IRA, or it might be the taxable account. And if you’re draining your IRA first, it’s gonna concentrate all of your taxable income and it might push you into higher tax brackets and it could trigger Medicare tax and social security tax.
But Steve, instead of thinking one bucket at a time, I’d rather you start thinking in terms of blending your income sources. You wanna break down your buckets, your IRA withdrawals are gonna be fully taxable. On the other hand, your brokerage accounts are gonna be subject to capital gains
[00:31:00]
tax, and that’s oftentimes more favorable. And you didn’t mention a Roth account, but for those of you that have Roth IRAs, that income is going to be tax free. So your IRAs are gonna be fully taxable at ordinary income. Your brokerage account subject to capital gains tax and your Roth IRAs are gonna be tax free. And when you combine withdrawals strategically, that means that you’re gonna take some from your taxable account, you’re gonna offset other income with your lower tax or your tax free sources. And the goal is to try to stay within your same tax bracket and not move into the next tax bracket and avoid unnecessary spikes. But like you though, Steve, many people think in terms of one bucket at a time, and that usually cause you to pay more taxes than necessary either now or in the future. I want you to think about all your buckets and start taking income from all of them, depending on your situation. But I thank you, Steve, for taking the time to write in that question.
If you wanna learn more about some tax saving strategies and how to put yourself in a position to control your taxes so you’re not at the whim of the IRS subject to what they want you to do, you wanna be more proactive instead of reactive, well I wanna send you a copy of my book, More Life Than Money. It’s an Amazon number one bestseller in multiple categories, and I talk a lot about taxes because that’s huge when it comes to your retirement planning. You’ll learn how you can be more proactive. You’ll learn about Roth conversions, and you’ll learn which accounts to start withdrawing from so that you can be as tax efficient as possible.
I’ll send you More Life Than Money absolutely free of charge. To get it, you just have to go to our website, which is providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book. Leave us your information and it’ll show up on your doorstep in just a few days. To claim your free copy of More Life Than Money, go to providencefinancialradio.com/book and you will have it shortly.
[00:33:00]
If you just hopped on, you’re listening to the Providence Financial Retirement Show. Thank you for joining us. I’m Anthony Saccaro and we’re spending our time talking about taxes. We’ve already talked about the three most common mistakes that I’ve seen retirees make along the way throughout my career. We’ve talked about taking income from the wrong sources and why that may cause you to pay more tax than necessary. We’ve talked about the ticking tax time bomb, and that is for those of you that have put all of your money in tax deferred retirement accounts, we also discussed a way out, and that is with Roth conversions, and you’re probably starting to see how complicated it can really be, but how do you start to put it all together?
Well, first of all, you have to know some things. You have to know where your income is coming from. You have to know how it affects your Social Security and Medicare Part B premiums, how it impacts your tax bracket, and you start to realize something important, and that is that this is not a one time decision.
[00:34:00]
That’s one of the mistakes we talked about earlier. People thinking that I’ve done with my taxes, I check the box and I’ll just set it and forget it. That’s a mistake. Taxes have to be managed over time. A lot of you just want a simple answer, just tell me what to do. But retirement tax planning doesn’t work that way.
Your situation changes every single year and you need to manage your taxes year by year, but you wanna have a long term focus. And that’s another mistake that we talked about is many of you are tax planning for this year only. How do you save as much taxes this year? And the mistake is that you could be causing yourself to have to pay a lot more taxes down the road by trying to get that instant gratification of tax savings today.
The goal for the long term is to try to stay in your same tax bracket that you are in today, to try not to go into an additional higher tax bracket. But you need to coordinate your IRA withdrawals along with your brokerage accounts and your Roth conversions and your Social Security and your capital gains.
[00:35:00]
All that needs to be coordinated to make sure that you do that, you have to ask each year, how much income do you need? Where should that income come from? How much of your income should be taxable versus tax free versus tax deferred? Your goal should not just be to minimize taxes this year. It should be to manage your tax brackets over the rest of your life.
And many of you have those three buckets that we talked about earlier when we were answering Steve’s question. You’ve got some tax deferred accounts, you’ve got some taxable accounts, and you have some Roth IRAs, some tax free accounts, and in one year you might intentionally take more income from one of those accounts based on your current tax situation.
In another year, you might reduce taxable income to avoid higher Social Security tax, but it all boils down to what your situation is each and every year with a long term focus, not just with regard to what’s gonna happen this year. This connects back to what we have been already talking about. You wanna avoid that ticking tax time bomb that we talked about.
If you are like a lot of people that are retired or about to retire, you might have saved a ton of money inside your tax deferred account and you might have no choice. You might be forced into start doing some Roth hybrid conversions in order to have some tax free income down the road. And if you don’t do that, you’re gonna find out that retirement’s gonna be very, very expensive because of the taxes you have to pay.
On the other hand, if you have these three buckets, the tax deferred, the taxable, and the Roth accounts, don’t think like Steve was thinking when he asked this question earlier about which bucket do I take it from. It makes sense most of the time to take some income from each bucket. That is what allows you to control your taxes.
[00:36:00]
Not one bucket at a time, but a strategy that allows you to take income from each bucket so that you can not leave your current tax bracket, but stay in that bracket and not pay more tax than necessary on Medicare and Social Security. It all comes back though to being proactive instead of being reactive.
Tax season is over, but I don’t want you to just check the box and wait to see what happens until next year. Start doing some proactive tax planning now and you’ll put yourself in a position to where when you do your taxes next year, you’ll be better off for it. If you’re not sure how to do that and you wanna learn what we’ve put together, an animated video that’s short, but it talks about proactive tax saving strategies that you’re probably not familiar with.
I want to email this free video to you absolutely free of charge, no cost, no obligation, just information about how to be more proactive with your taxes. If you want it, just go to our website, give us your information and we’ll email it right over to you. The website to go to is providencefinancialradio.com/video.
Again, it’s providencefinancialradio.com/video. Give us your information and we will get that video emailed over to you shortly. I’m Anthony Saccaro. Thank you for taking time outta your day, wherever you might be to join us here for the Providence Financial Retirement Show. We are your retirement income source and this is the place where retirees come for income.
If you just tuned in, you’ve missed a lot. We’re talking about taxes. We’re really talking about why being proactive is better than being reactive. Something that I’ve talked a lot about here on the Providence Financial Retirement Show. If you have been with us, you probably are starting to understand how complicated taxes can actually be.
You’re probably already starting to realize as well too, how important it is to coordinate your tax strategies and even to have a tax strategy and when all of this is not coordinated, when there’s no real strategy behind your tax situation, it leads to one of the biggest missed opportunities that I’ve seen, and it generally shows up right after tax season, right where we are right now.
[00:39:00]
Most people treat tax season like a deadline. It’s a task to complete. It’s a check box to check off, and once it’s done, they’ve checked off the box and they’ve moved on. The real opportunity though is not just finishing your taxes before April 15th. The real opportunity is to start doing some proactive planning now because you already know your numbers.
It’s fresh in your mind. You know your tax brackets and you know how your income was taxed. Most people don’t do anything with that information though. They don’t adjust their income, they don’t adjust where their withdrawals are coming from. They don’t reposition their assets in the more tax efficient account, and they don’t necessarily change or plan their withdrawals. They just repeat the same pattern over and over again, which means you’re gonna have the same results. And if you’re paying too much in tax this year, then that means in future years you’re gonna continue paying too much in tax.
There’s a lot of risks in retirement, and some of them are not risks that you can control. Market risk would be in that category. For those of you that have a lot of market risk and investments in the stock market, you can’t really control that risk, but taxes are one of the most controllable risks that you actually get to be in charge of throughout your retirement, but that can only happen if you actually plan for them.
The difference between paying what you owe, maybe even saving money on taxes, is gonna come down to what you do now between now and the end of the year. And this requires you to really look at your returns, look at your investments and project going forward what your income is gonna be.
[00:41:00]
It’s gonna require you that you coordinate your income sources and if you’ve been in the set it and forget it mode like I know so many of you are, that’s a strategy to have to pay more taxes than necessary. That goes back to one of the three mistakes that we talked about in the very first segment of the show. Mistake number one was set it and forget it. Don’t do that. You have to do tax planning every year, but the mistake is not to do tax planning solely for this year. You want to have a long term outlook when you do your tax planning as well.
And many of you, that’s not what you’re thinking, but mistake number one is setting it and forgetting it, and you don’t want to do that. But mistake number two we talked about is short term thinking, planning only for this year and not next year. And the third mistake we talked about is just not having a real strategy at all.
Whether your strategy is going to include changing where you take your income from, or whether it’s gonna include Roth conversions, that will require you pay a little more taxes now, but have a lot of tax savings later. You have to have a strategy. And I’ve been around for 27 years as a retirement advisor, and I know that many of you don’t have a strategy.
You just keep doing what you’ve already done. And if there’s a way to save taxes, you’re not taking advantage of that. And the time to take advantage of that is now, not next quarter when you’re gonna be filing and doing your tax preparation for 2026. What you do between now and the end of the year is gonna determine how much tax savings you have or how much extra taxes you’re gonna have to pay when it comes time to file your taxes next year.
Don’t do that. Please get yourself in a position to have an actual strategy, and if you’re not sure how to do that but you wanna learn more, well that’s exactly why I wrote my new book, More Life Than Money. I talk a lot about Roth conversions. I talk a lot about strategies and some of the other things that we’ve talked about on this show as well.
Plus I talk about some of the more common mistakes that I’ve seen retirees make over my career and how to avoid them. I wanna send you More Life Than Money absolutely free of charge. You just have to ask for it. You can do that by going to providencefinancialradio.com/book. Again, it’s providencefinancialradio.com/book.
Leave us your information and within a few days a FedEx truck will pull up in front of your house and hand deliver you a copy of More Life Than Money. To claim your free copy, just go to providencefinancialradio.com/book and we will get it right out. But I know you’re gonna learn something from reading it and you’ll enjoy it as well because I wrote it in English, meaning that it’s very understandable.

Well, I’m Anthony Saccaro. We’ve spent our entire show talking about taxes and how to be more proactive than reactive. Thank you for taking time outta your day to join us. I certainly hope you learned something that you didn’t know before and something that will give you the confidence and clarity and the peace of mind you deserve in retirement.
Thank you for joining us for this week’s episode of the Providence Financial Retirement Show. Have a great week everyone. God bless.