I Retired at 62 but Won’t Touch My IRA Until 75. That Gap Is a Tax Goldmine.

One of your biggest tax-saving opportunities may come during the first years of retirement. Leaving the workforce can temporarily reduce your taxable income, creating a window when Roth conversions may cost less. That opportunity could start closing once Social Security benefits and other sources of taxable income begin.

The Tax Window Near Retirement That Is Often Overlooked

Traditional IRA withdrawals are generally taxed as ordinary income, and Roth conversions work the same way. Any pretax amount converted from a traditional IRA to a Roth IRA is included as income for the year of the conversion.

During your working years, wages may already fill much of the lower federal tax brackets. Adding a Roth conversion on top of that income can push more of the converted amount into higher brackets.

The first years of retirement can look different. Someone who retires at 62 may have little income beyond interest, dividends or pension payments. If they also delay claiming Social Security, their taxable income could remain relatively low for several years.

That planning opportunity may become smaller once additional income begins arriving from sources such as taxable Social Security benefits, pension payments, portfolio earnings, traditional IRA withdrawals and required minimum distributions (RMDs).

Someone who turns 62 in 2026 was born in 1964. Under the current law, individuals born in 1960 or later generally begin taking RMDs at age 75, which could create a window of about 13 years before mandatory withdrawals begin. ¹

A financial advisor may help you estimate how much to convert each year without pushing your income into a higher tax bracket.

Example of a Conversion in the Tax Window

How much that opportunity is worth depends on your taxable income. The same Roth conversion can produce very different tax bills based on when you complete it. As an example, let’s assume that you are a single retiree with $20,000 of taxable income before completing a Roth conversion. Converting $50,000 from a traditional IRA in 2026 would increase your taxable income to $70,000.

For single filers in 2026, the 10% federal tax bracket applies to taxable income up to $12,400, the 12% bracket applies through $50,400, and the 22% bracket applies through $105,700. ²

Because you already have $20,000 of taxable income, the first $30,400 of the conversion fills the remainder of the 12% bracket ($50,400 − $20,000 = $30,400). The remaining $19,600 of the conversion is taxed at 22%.

Now, let’s assume that you wait until later in retirement, after Social Security benefits and RMDs have increased your taxable income to $110,000 before making the same Roth conversion. For context, the average Social Security retirement benefit was about $2,071 per month as of January 2026. ³ That alone would push a retiree’s taxable income close to $25,000 before RMDs and other taxable sources could add more.

Converting $50,000 would increase your taxable income to $160,000. Because your income already exceeds the top of the 22% bracket, the entire conversion would fall into the 24% federal tax bracket, which applies to taxable income from $105,701 to $210,775 for single filers in 2026.

For this example, completing the Roth conversion before other retirement income begins results in an estimated federal tax bill that is about $4,040 lower than waiting until later. Actual tax savings depend on your income, deductions, state taxes and future changes in tax law.

Tax Consequences for Roth Conversions

Converting too much in one year could increase your Medicare premiums. Medicare generally uses your tax return from two years earlier to calculate those premiums. A larger conversion could also make more of your Social Security benefits taxable and increase your state income taxes.

Those potential costs are another factor to consider when deciding how much to convert each year. A financial advisor can help you decide on a conversion amount for your tax plan.

Photo credit: ©iStock.com/bymuratdeniz, ©iStock.com/Tinpixels.