Good morning, Retirement Starts Today Community. Welcome to "Every Day is Saturday," the newsletter reminding us that in retirement, every day is Saturday (including Thursday mornings).​​​

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A lot of retirees assume their tax situation gets simpler once they stop working, but that’s not always the case. There are plenty of ways high-net-worth retirees end up paying more than they need to—sometimes without even realizing it.

Maybe it’s interest and dividend income getting taxed at higher rates, or IRA withdrawals happening earlier than necessary. Maybe it’s something as simple as missing the right way to report charitable giving. These things add up, and over time, they can quietly eat away at retirement savings.

Some of the biggest inefficiencies show up on tax returns in ways people don’t always expect. Social Security benefits taken too soon, mutual funds kicking off surprise capital gains, or estimated tax payments falling short and triggering penalties—it all matters.

There are ways to structure income, investments, and withdrawals to keep more of what’s earned, but they take a little planning. The goal isn’t just to minimize taxes for the sake of it, but to make sure every dollar is working as efficiently as possible.

Most of these inefficiencies can be fixed with a few small adjustments. Some require a different way of thinking about income in retirement, others just mean taking advantage of tax rules that are already there. Either way, it’s worth a closer look. A little awareness now can mean thousands saved over the years. Click here to listen​

Outline of This Episode

• (0:00) Inefficiencies on Rich Retirees’ Tax Returns
• (4:07) Top tax inefficiencies: Interest, dividends, and premature IRA withdrawals
• (6:52) Charitable distributions, Social Security timing, and phantom capital gains
• (9:33) Capital gains, charitable intent, and avoiding underpayment penalties
• (12:24) Listener question: Travel spending habits of wealthy retirees
• (19:05) Listener question: Callable CDs and interest rate risk
• (21:16) Closing thoughts and practical takeaways

The Hidden Inefficiencies Costing Retirees More in Taxes

Many retirees assume their tax situation is straightforward, but inefficiencies in interest, dividends, and IRA withdrawals can lead to unnecessary tax burdens. Qualified dividends and tax-exempt income are often overlooked in favor of taxable alternatives, while premature IRA distributions can trigger higher-than-needed tax liabilities. Structuring investments correctly and understanding withdrawal timing can make a big difference in keeping more of what’s earned.

Social Security Timing and the Pitfalls of Capital Gains

Taking Social Security too early can mean leaving money on the table, especially for married couples. The higher-earning spouse’s decision is key since it impacts the survivor benefit down the road. Waiting until 70 can maximize lifetime income, but even delaying a few years past the earliest eligibility age can make a difference. For couples, turning on the smaller benefit first can relieve financial pressure while allowing the larger one to grow.

Mutual funds can also cause tax headaches, even when no shares are sold. Many investors are surprised by capital gains distributions that show up on their tax returns due to fund managers buying and selling within the portfolio. ETFs and other passive investments tend to be more tax-efficient, giving retirees more control over when gains are realized. A small shift in investment strategy can help reduce these unnecessary tax surprises.

The Right Way to Combine Charitable Giving and Investments

Charitable giving can do more than support meaningful causes—it can also reduce tax burdens when structured correctly. Donating appreciated stocks instead of cash allows retirees to avoid capital gains taxes while still benefiting from a full deduction. For those over 70½, using qualified charitable distributions (QCDs) from IRAs is another efficient way to give, lowering taxable income without increasing adjusted gross income.

The key is to give in a way that makes the most financial sense. Some retirees batch donations into a donor-advised fund, allowing them to take a larger deduction in a high-income year while spreading donations out over time. Others shift to QCDs once required minimum distributions (RMDs) kick in, turning mandatory withdrawals into tax-free charitable contributions. Either way, structuring donations wisely can create a win-win for both the retiree and the causes they support.

Avoiding Costly Penalties and Optimizing Tax Payments

Underpayment penalties can quietly chip away at retirement savings, but they’re easy to avoid with the right approach. Many retirees focus on quarterly tax payments, but using IRA withdrawals for tax withholding can be a simpler, more efficient option. Withholding is treated as if paid evenly throughout the year, making it a way to stay compliant without the hassle of managing estimated payments. Small tweaks like this can add up, helping retirees keep more of their money invested longer.

Resources & People Mentioned

• ​The Retirement Podcast Network​
• ​Kiplinger’s Article​
• ​TurboTax Safe Harbor Guide​
• ​Fidelity Charitable​

Retirement Starts Today (the book) is Available!

My new book, Retirement Starts Today: Your non-financial guide to an even better retirement, is available! To order click here​

That's it for our three hundred and sixty-eighth installment of "Every Day is Saturday." As always, reply to this email with your retirement questions and you might hear them featured on the show! I read and respond to (almost) every email.

Have a great "Saturday",
- Benjamin Brandt (your humble host)

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