Margaret is 63. She retired two years ago. She has $940,000 sitting in a traditional IRA and almost no income this year.
Her tax return looks like a college student's.
She thinks she is winning.
She is not. She is in the eye of a storm, and she has about ten years before it arrives.
At 73 the required withdrawals start. They do not ask permission. They do not care that she only needs $40,000 a year. They are calculated off the balance, and her balance is large.
Her income will jump and never come back down. More of her Social Security becomes taxable. Her Medicare premiums rise. And if her husband dies first, she gets moved into single brackets that are roughly half as wide, on nearly the same income.
Margaret does not have a savings problem. She has a timing problem.
And right now, in her low-income sixties, she is standing in the single best tax window of her entire life.
Most people never notice it. Then it closes.