If Most of Your Retirement Savings Are in IRAs, Are Taxes a Bigger Risk Than the Market?

Most people enter retirement believing the biggest unknown is market performance.

That’s understandable. Markets are visible. Account balances move every day.

But for retirees with most of their savings in IRAs, 401(k)s, and other pre-tax retirement accounts, the market is often not the largest variable over time. Taxes are.

Not because tax rates suddenly spike — but because withdrawals activate a set of rules that didn’t matter during accumulation.

Why Does Retirement Planning Change After You Stop Working?

This is one of the most common questions retirees ask — often without realizing they’re asking it.

During your working years, retirement planning is largely linear:

• You contribute

• You invest

• You defer taxes

• You repeat

Once income from work stops, the problem changes. Retirement planning becomes about:

• When money comes out

• Which account it comes from

• How withdrawals interact with other income

This is where many retirees feel like things suddenly became more complicated — because they did.

Are IRAs Tax-Free in Retirement?

No — and this is where confusion often starts. Traditional IRAs and pre-tax employer plans are tax-deferred, not tax-free. That distinction matters much more in retirement than it does while you’re working.

Once withdrawals begin, IRA distributions interact with:

• Ordinary income tax brackets

• Social Security taxation

• Medicare premiums

• Required Minimum Distributions (RMDs)

None of this is obvious when you’re still accumulating.

What Are Required Minimum Distributions, and Why Do They Matter?

Many retirees first hear about RMDs as a technical rule. In practice, RMDs do more than force distributions. They:

• Reduce flexibility over time

• Create taxable income whether you need it or not

• Limit how much control you have over timing

We’ve seen situations where the rule itself was simple — but its interaction with taxes and Medicare wasn’t.

That distinction matters.

Why Do Two Retirees With Similar Portfolios Have Different Outcomes?

This is another question people often ask after the fact. Two retirees can:

• Have similar account balances

• Earn similar investment returns

• Spend similar amounts

…and still experience very different after-tax outcomes.

The difference usually isn’t the portfolio. It’s when and how money is withdrawn, and what else is happening in the same tax years. This is where retirement planning stops being theoretical and becomes situational.

Is Retirement Planning Mostly About Investments?

For retirees with significant IRA assets, investments still matter — but they are rarely the dominant variable.

Over long retirements, outcomes are often driven by:

• Withdrawal sequencing

• Tax coordination

• Timing decisions made years earlier

These aren’t problems you see on a performance report.

A look at future publications: Why does this series exist?

This article initiates a series that isn’t meant to teach people how to calculate taxes or execute transactions. It exists to help retirees understand:

• Where complexity tends to show up

• Why rules interact in ways that aren’t obvious

• Why experience matters once withdrawals begin

Upcoming articles will explore questions such as:

• How do RMDs actually change retirement planning?

• Why are inherited IRAs harder than they look?

• When do Roth conversions help — and when do they backfire?

• Why do Medicare premiums increase unexpectedly?

• How should IRA decisions be coordinated with estate planning?

Each article will focus less on rules and more on implications.

A Calm Next Step

If most of your retirement savings sit in IRAs or other pre-tax accounts, it may be worth reviewing not just how your money is invested, but how and when it will eventually be withdrawn. A thoughtful conversation can often reveal clarity around taxes, timing, and trade-offs.