Case Study: How a Married Couple Reduced Taxes on Social Security by Over $18,000

Client Profile (Names Withheld)

• Married couple
• Ages 66 and 68
• Recently retired
• Planning to claim Social Security within the next few years

Like many people I work with, this couple believed they were “in good shape” for retirement. They had done a lot of things right — steady careers, consistent retirement savings, and no major debt heading into retirement.

But when we looked closer, there was a hidden tax issue that could have quietly cost them tens of thousands of dollars over their retirement.

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The Initial Situation

At our first meeting, here’s what their financial picture looked like:

• Approximately $1.1 million in traditional IRAs
• Minimal Roth savings
• Modest taxable brokerage account
• No pension
• Planned Social Security benefits beginning around ages 67–70

On the surface, everything looked straightforward. However, once we started projecting income after Social Security and RMDs, a red flag immediately appeared.

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The Problem They Didn’t See Coming

When we modeled their future income, we found that:

• Once both spouses claimed Social Security
• And Required Minimum Distributions (RMDs) began
• A significant portion of their Social Security benefits would become taxable

In fact, under their original plan:

• Up to 85% of their Social Security benefits would be taxed
• Their marginal tax rate during retirement would be higher than expected
• Medicare premiums were also at risk of increasing due to income thresholds

They weren’t overspending.
They weren’t living extravagantly.

The issue was timing — not behavior.

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The Planning Opportunity: A Critical Window

What made this case especially powerful is that they came to me early enough.

They were:

• Retired
• Not yet collecting Social Security
• Not yet subject to RMDs

This created what I often call a tax planning window — a period where income is temporarily lower and strategic decisions can have an outsized long-term impact.

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The Strategy We Implemented

Instead of waiting until Social Security and RMDs forced higher taxable income, we took a proactive approach.

1. Strategic Roth Conversions

Over several years, we converted portions of their traditional IRAs into Roth IRAs, carefully:

• Filling lower tax brackets
• Avoiding spikes in taxable income
• Coordinating conversions with future Social Security timing

The goal wasn’t to eliminate taxes — it was to control them.

2. Coordinated Social Security Timing

We aligned their Social Security claiming strategy with the Roth conversion plan so that:

• Future provisional income would stay lower
• Less Social Security would be pulled into taxation
• Lifetime after-tax income would increase

3. Income Smoothing

By balancing withdrawals across:

• Taxable accounts
• Traditional IRAs
• Roth accounts

we reduced the risk of triggering unnecessary tax thresholds later in retirement.

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The Outcome

After running long-term projections, the results were clear:

• Over $18,000 in estimated lifetime tax savings tied directly to Social Security taxation
• Reduced exposure to the Social Security tax torpedo
• Improved flexibility in retirement withdrawals
• Lower risk of future Medicare premium increases

Just as important, they gained clarity and confidence. They understood why the plan worked — not just what we were doing.

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Why This Case Matters

This couple didn’t need exotic investments or risky strategies.
They needed coordination.

This is a perfect example of why Social Security decisions should never be made in isolation. When retirement income, taxes, and timing are aligned properly, the difference isn’t theoretical — it shows up in real dollars.

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Key Takeaway

Social Security isn’t “taxed or not taxed.”
It’s planned for — or reacted to.

When retirees act early, they often have far more control than they realize. When they wait, many of the options quietly disappear.

This is why I encourage people to look at Social Security planning years before benefits begin — not months after.