The ‘Wait Until You Retire’ Tax Myth Only Works for 4% of People, According to This Retirement Advisor

The advice sounds sensible on its surface: defer your taxes now, because you will be in a lower bracket when you retire. David Brooks, speaking on the Retire SMART podcast, calls it a myth. “So many advisors have helped clients defer, defer, defer, because we all been told this myth, right?” he said. “Defer your taxes because you’ll be in a lower tax bracket when you retire. And that’s a joke. That’s 4% of the people I’ve run into.”

For workers who spent three decades routing every spare dollar into a traditional 401(k) on that promise, Brooks’ experience is worth sitting with. When a retiree lands in a higher bracket instead of a lower one, the IRS claims a larger share of the nest egg than any original projection assumed. Tax planning draws on dozens of interlocking tactics, and deferral is only one of them.

A traditional 401(k) skips income tax today, then taxes both the original contributions and decades of compounded growth as ordinary income at withdrawal. That trade pays off only when three conditions align: tax rates hold steady or fall, retirement income lands meaningfully below working income, and withdrawals stay spread out rather than spiking in a single year. Brooks argues that combination is rare in practice.

Three forces push many retirees into higher brackets than they expected. The first is Required Minimum Distributions, which force withdrawals on the government’s timeline, not the retiree’s. Under the SECURE 2.0 Act, RMDs begin at age 73 for those born between 1951 and 1959 and at age 75 for anyone born in 1960 or later. The second force is Social Security taxation. Benefits become partly taxable once provisional income crosses thresholds that have been frozen since the 1980s and never adjusted for inflation: $25,000 for single filers and $32,000 for those filing jointly. Because those ceilings never move, inflation alone drags more retirees over the line each year. The third force is Medicare: Part B and Part D premiums climb sharply through IRMAA surcharges once income tops certain tiers.

In 2026, the first IRMAA threshold sits at $109,000 for a single filer, and it functions as a cliff: one dollar over triggers the full surcharge for that tier. The standard Medicare Part B premium is $202.90 per month, but it can reach $689.90 per month for the highest earners. Because IRMAA is calculated using income from two years prior, a large IRA withdrawal today can raise Medicare costs in 2028. A retiree drawing $80,000 from a traditional IRA in a given year can simultaneously trigger Social Security taxation, an IRMAA surcharge, and a bracket jump, stacking three separate tax effects that most retirement projections never anticipate.

Brooks’ own story anchors the argument. After selling his restaurants, he owed more in taxes than he had “ever made in a year” because, in his words, he “didn’t get good proactive tax planning.” Building a profitable business takes a completely different skill set than engineering a tax-efficient exit, and the same gap shows up for retirees who assembled a seven-figure 401(k) and then find the withdrawal-phase rules working against them.

Brooks said his firm actively uses roughly 170 incentives written into the U.S. tax code, layering five to eight strategies per client. The standard deferral playbook draws on exactly one. With the 401(k) employee deferral limit at $24,500 for 2026 (plus $8,000 in catch-up contributions for workers age 50 and older, and $11,250 for those aged 60 to 63), more workers than ever are accumulating substantial tax-deferred balances that will eventually demand a deliberate withdrawal strategy. Relying on a single tactic to unwind decades of deferred tax is the difference between handing money to the IRS and keeping it.

One significant recent development is the One Big Beautiful Bill Act, signed into law in July 2025. It created a temporary $6,000 senior deduction for taxpayers age 65 and older, covering tax years 2025 through 2028. The deduction is per eligible individual, so a married couple where both spouses qualify can claim $12,000 combined. It can be claimed whether the filer takes the standard deduction or itemizes, and it stacks on top of the existing additional standard deduction already available to seniors. The deduction phases out at a rate of 6% above $75,000 in modified adjusted gross income for single filers ($150,000 for joint filers) and disappears entirely above $175,000 for single filers and $250,000 for joint filers. According to the Senate Finance Committee, the combined deduction changes in the bill mean that 88% of all seniors receiving Social Security income will effectively pay no federal tax on those benefits. For retirees who fall within the qualifying income range, the new deduction is a meaningful offset. It does not, however, change the underlying IRMAA exposure or the Social Security provisional income thresholds. A multi-strategy approach remains the only way to keep all of these moving parts from colliding at once.

“Taxes are the No. 1 bill you’re gonna face in life, but it gets even worse in retirement,” Brooks said. He identifies two groups that feel this most sharply: people at or near retirement age, and small business owners. For entrepreneurs, every dollar overpaid to the IRS is a dollar unavailable to reinvest in the business. For retirees, the damage is often already locked in by decades of single-strategy advice.

Tips for retirement tax strategies

1. Pull your most recent tax return and identify your marginal bracket. Then project your first full retirement year of income, including Social Security, pensions, RMDs from any tax-deferred accounts, and any part-time earnings. If that projected bracket equals or exceeds your current one, the deferral bet is not paying off.
2. Check whether the 2026 IRMAA tier at $109,000 for single filers falls within reach of your projected retirement income. Because IRMAA uses income from two years prior, a large Roth conversion or IRA distribution today affects your Medicare premiums in two years, and the cliff effect deserves its own line in any retirement income model.
3. Consider working with a financial advisor to build a multi-strategy tax plan that covers RMDs, IRMAA thresholds, Social Security taxation, and applicable provisions from recent legislation, including the temporary senior deduction and its income phase-out range.

The deferral playbook was sold as a universal answer to a question that has many different answers depending on the individual. For most retirees, running the numbers reveals that the universal answer is the wrong one.

Editor’s note: This pass corrects the Social Security provisional income threshold for joint filers from $34,000 to $32,000 (the accurate statutory figure), and adds the 2026 catch-up contribution limits for workers aged 50 and over ($8,000) and those aged 60 to 63 ($11,250). It also adds the Senate Finance Committee estimate that 88% of seniors receiving Social Security will effectively pay no federal tax on those benefits under the One Big Beautiful Bill Act’s combined deduction changes.

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