Retirement's Biggest Bill Isn't Spending — It's Taxes
A sample plan's full 46-year tax timeline, with the ACA cliff, Medicare IRMAA, and $3.38M saved by the right withdrawal order.
Numbers shown are from a sample plan, for illustration only — not financial advice.
What you'll see
This demo opens on a sample plan's full 46-year tax timeline — every year from age 48 to 93, priced before the retiree gets there. On $276,000 a year of planned spending, the chart totals $3.54M of tax and IRMAA surcharges across the horizon, with a red marker at age 48 showing where the ACA subsidy cliff cuts in (MAGI over 400% of the poverty line) and a dashed line at 65 where Medicare — and IRMAA — begin.
Clicking into age 48 opens a year-by-year breakdown: MAGI of $222,513, $276,000 of lifestyle spending, $309,169 of total cash need, $44,211 of capital gains, and $23,131 of tax, with the ACA subsidy explicitly zeroed out because the plan is over the cliff. Below it, the bucket-aware withdrawal order — taxable, then tax-deferred, then Roth — is shown against the actual account mix ($9.75M / $614k / $40k), alongside a note to hold roughly two years of spending in cash as a sequence-of-returns buffer.
Toggling that draw order off and back on demonstrates the payoff directly: sequencing the withdrawals correctly, on its own, saves an estimated $3.38M of tax across the plan.
Chapters
- 0:00Retirement's biggest bill isn't spending — the Tax Planning view opens on a sample plan.
- 0:0846 years of taxes, priced before you get there.
- 0:21IRMAA stacks on at 65 — billed on a 2-year lookback.
- 0:32Click any year — see exactly where the bill comes from.
- 0:40Draw order alone: $3.38M saved.
Why it matters
- Prices tax, IRMAA, and the ACA cliff for every year of the plan, not just a single “effective tax rate” assumption.
- Uses bucket-aware withdrawal sequencing (taxable → tax-deferred → Roth) that's shown here saving an estimated $3.38M.
- Surfaces IRMAA's two-year income lookback, a detail that's easy to miss until the surcharge shows up.
- Links directly to the Roth conversion planner for years where converting could lower future tax.
FAQ
What does “bucket-aware” withdrawal mean?
It means the order you draw from taxable, tax-deferred, and Roth accounts is optimized year by year, rather than pulled from one account at a time — the demo shows this saving an estimated $3.38M versus a flat draw.
Why does the ACA cliff show up in a tax-planning demo?
Once modified adjusted gross income crosses 400% of the poverty line, ACA subsidies disappear entirely — it's a cliff, not a gradual phase-out, so it belongs in the same year-by-year tax view as IRMAA and ordinary tax.
What's NIIT?
The 3.8% Net Investment Income Tax, a federal surtax on investment income above certain thresholds — one of several taxes layered into the timeline alongside ordinary tax and IRMAA.