2026 Medicare IRMAA Brackets: What Triggers Higher Premiums and How to Avoid

Medicare IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums when your income exceeds certain thresholds. These surcharges are based on your Modified Adjusted Gross Income (MAGI) from two years prior. At Greenbush Financial Group, our analysis shows that proactive tax and withdrawal planning can help retirees avoid or minimize IRMAA and significantly reduce long-term healthcare costs.

What Is Medicare IRMAA and How Does It Work?

IRMAA is an additional premium Medicare beneficiaries pay if their income exceeds specific limits.

Key Facts

• Applies to Medicare Part B and Part D

• Based on income from two years prior

• Uses Modified Adjusted Gross Income (MAGI)

• Adjusted annually for inflation

Example

Your 2026 Medicare premiums are based on your 2024 income.

This lag creates planning opportunities, especially in early retirement years.

2026 IRMAA Income Limits and Surcharge Brackets

IRMAA is triggered when your income crosses certain thresholds.

2026 Estimated IRMAA Thresholds 

At Greenbush Financial Group, we emphasize that even $1 over a threshold can trigger a significantly higher premium.

What Counts as Income for IRMAA (MAGI)?

IRMAA is based on Modified Adjusted Gross Income, which includes more than just wages.

Included Income Sources

• IRA and 401(k) withdrawals

• Capital gains from investments

• Dividends and interest

• Rental income

• Social Security (partially taxable portion)

• Roth conversions

Important Note

Tax-free municipal bond interest is also included in MAGI for IRMAA purposes.

How Much Are IRMAA Surcharges?

IRMAA increases both Part B and Part D premiums.

Example Impact

• Standard Part B premium (baseline)

• IRMAA can increase premiums by hundreds of dollars per month per person

• Part D surcharges are smaller but still meaningful

Key Insight

Over a 10–20 year retirement, IRMAA can add up to tens of thousands of dollars in additional healthcare costs if not managed properly.

Planning Strategies to Reduce or Avoid IRMAA

Strategic income planning is the most effective way to manage IRMAA.

1. Manage Your Taxable Income Each Year

• Stay below key IRMAA thresholds when possible

• Avoid large one-time income spikes

2. Use Roth Conversions Strategically

• Convert funds in lower-income years before Medicare

• Reduce future taxable income and RMDs

3. Time Large Withdrawals Carefully

• Spread income over multiple years

• Avoid triggering IRMAA in a single year

4. Leverage Roth Accounts

• Roth withdrawals do not increase MAGI

• Provides tax-free income flexibility

5. Consider Capital Gains Timing

• Harvest gains in lower-income years

• Offset gains with losses when possible

At Greenbush Financial Group, we often build multi-year tax projections to help clients stay below IRMAA thresholds.

IRMAA Planning Before and After Retirement

Before Retirement (Ages 55–63)

• Ideal window for Roth conversions

• Lower income years create planning opportunities

• Reduce future IRMAA exposure

Early Retirement (Before Medicare)

• Control income levels carefully

• Balance withdrawals across accounts

After Age 65

• Monitor RMDs and income levels

• Use Roth withdrawals to manage thresholds

• Plan ahead for future income spikes

What Happens If Your Income Drops?

You may be able to appeal IRMAA if your income has decreased due to certain life events.

Qualifying Life-Changing Events

• Retirement

• Marriage or divorce

• Death of a spouse

• Loss of income-producing property

You can file an appeal with Social Security to request a lower premium.

Common IRMAA Mistakes to Avoid

• Ignoring IRMAA when doing Roth conversions

• Taking large IRA withdrawals in a single year

• Not planning for RMDs

• Overlooking capital gains impact

• Assuming Medicare premiums are fixed

At Greenbush Financial Group, we often see that IRMAA surprises retirees who focus only on taxes without considering healthcare costs.

Final Thoughts

IRMAA is one of the most overlooked retirement expenses, yet it can significantly increase your Medicare costs. The key is not just minimizing taxes in a single year but managing income over time to avoid crossing key thresholds.

At Greenbush Financial Group, our analysis shows that proactive planning around withdrawals, Roth conversions, and income timing can help reduce IRMAA and improve overall retirement outcomes.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

Frequently Asked Questions

1. What does IRMAA stand for?
   Income-Related Monthly Adjustment Amount, a surcharge on Medicare premiums based on income.
2. What income is used to calculate IRMAA?
   Modified Adjusted Gross Income (MAGI) from two years prior.
3. Can Roth withdrawals trigger IRMAA?
   No, qualified Roth withdrawals do not increase MAGI.
4. Can IRMAA be appealed?
   Yes, if you have a qualifying life-changing event such as retirement or loss of income.
5. How can I avoid IRMAA surcharges?
   By managing taxable income, using Roth strategies, and avoiding large income spikes.

2026 Roth IRA Conversions Explained: Smart Timing and Costly Mistakes

Roth conversions can be one of the most powerful tax planning tools in retirement, but they are not always beneficial. A Roth conversion involves moving money from a pre-tax account into a Roth account and paying taxes now to avoid taxes later. At Greenbush Financial Group, our analysis shows that Roth conversions are most effective when done strategically across multiple years, not as a one-time decision.

What Is a Roth Conversion and How Does It Work?

A Roth conversion moves funds from a Traditional IRA or 401(k) into a Roth IRA or 401(k).

Key Mechanics

• Converted amount is taxed as ordinary income

• No early withdrawal penalty if done correctly

• Future growth and withdrawals are tax-free

• No Required Minimum Distributions (RMDs) for Roth IRAs

Example

• Convert $50,000 from an IRA to a Roth IRA

• Pay taxes on $50,000 this year

• Future withdrawals are tax-free

At Greenbush Financial Group, we view Roth conversions as a way to “prepay taxes” at potentially lower rates.

When Roth Conversions Make Sense

There are specific scenarios where Roth conversions can significantly improve long-term outcomes.

1. Low-Income Years in Early Retirement

The period between retirement and starting Social Security or RMDs is often ideal.

• Lower taxable income

• Opportunity to fill lower tax brackets

• Reduce future tax burden

2. Before Required Minimum Distributions (RMDs)**

RMDs can force higher taxable income later in retirement.

• Converting early reduces future RMDs

• Helps avoid higher tax brackets in your 70s

3. Expecting Higher Future Tax Rates

If you believe your future tax rate will be higher:

• Paying taxes now may be beneficial

• Locks in current tax rates

4. Large Pre-Tax Account Balances

High IRA or 401(k) balances can create tax challenges later.

• Large RMDs

• Increased IRMAA surcharges

• Higher Social Security taxation

5. Leaving Assets to Heirs

Roth accounts can be more tax-efficient for beneficiaries.

• Tax-free withdrawals for heirs

• No lifetime RMDs for original owner

At Greenbush Financial Group, Roth conversions are often used as part of a broader estate and tax planning strategy.

When Roth Conversions May Not Make Sense

Roth conversions are not always the right move.

1. Already in a High Tax Bracket

If converting pushes you into a higher bracket:

• You may pay more tax than necessary

• Reduces the benefit of the conversion

2. Short Time Horizon

If you expect to use the money soon:

• Limited time for tax-free growth

• Less benefit from conversion

3. Paying Taxes From the Conversion Itself

Using IRA funds to pay taxes reduces the amount converted.

• Decreases long-term growth potential

• Less efficient overall

4. Expecting Lower Future Tax Rates

If your income will decrease later:

• You may pay more tax now than necessary

5. Impact on Medicare and Social Security

Conversions increase taxable income.

• May trigger IRMAA surcharges

• Can increase taxation of Social Security

At Greenbush Financial Group, we often see Roth conversions backfire when these factors are not considered.

The “Tax Bracket Filling” Strategy

One of the most effective ways to approach Roth conversions is by filling up lower tax brackets.

How It Works

• Identify your current tax bracket

• Convert just enough to stay within that bracket

• Avoid jumping into higher brackets

Example

• Top of 12% bracket = target income level

• Convert enough to reach that limit

• Stop before entering the 22% bracket

This strategy spreads conversions over multiple years, reducing overall tax impact.

Roth Conversions and IRMAA Considerations

Roth conversions increase your income for that year, which can affect Medicare premiums.

Key Impact

• Higher income can trigger IRMAA surcharges

• IRMAA is based on income from two years prior

Planning Tip

Balance Roth conversions with IRMAA thresholds to avoid unnecessary premium increases.

A Multi-Year Roth Conversion Strategy Example

Scenario

• Age 62, recently retired

• $800,000 in IRA

• Low income before Social Security

Strategy

• Convert $40,000–$60,000 annually

• Stay within a lower tax bracket

• Delay Social Security

Outcome

• Reduced future RMDs

• Lower lifetime taxes

• Increased tax-free income later

At Greenbush Financial Group, this type of phased approach is often more effective than a single large conversion.

Common Roth Conversion Mistakes

• Converting too much in one year

• Ignoring tax bracket thresholds

• Overlooking IRMAA impacts

• Not coordinating with Social Security timing

• Failing to plan conversions over multiple years

Final Thoughts

Roth conversions can be a powerful tool, but only when used strategically. The goal is not simply to convert assets, but to reduce lifetime taxes and create more flexibility in retirement income.

At Greenbush Financial Group, our analysis shows that the most successful strategies involve careful timing, tax bracket management, and long-term planning.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. Is it a bad idea to retire in a down market?
   Not necessarily, but it increases sequence of returns risk and requires careful planning.
2. How much cash and short-term fixed income should I have in retirement?
   Typically 1 to 3 years of living expenses.
3. Should I stop withdrawals during a downturn?
   Not entirely, but reducing withdrawals can improve long-term outcomes.
4. Can a market downturn ruin my retirement plan?
   It can if not managed properly, especially in the early years of retirement.
5. What is the best strategy during a market downturn?
   Maintain a cash reserve, adjust withdrawals, stay invested, and focus on long-term planning.

2026 Bear Market Retirement Planning: How to Avoid Running Out of Money

Retiring during a market downturn can significantly impact how long your retirement savings last due to sequence of returns risk. When withdrawals begin during a declining market, losses can compound and reduce long-term portfolio sustainability. At Greenbush Financial Group, our analysis shows that implementing the right withdrawal, allocation, and income strategies can help protect your retirement plan even in volatile markets.

Why Retiring in a Down Market Is Risky

The primary concern is not just market losses, but when those losses occur.

Sequence of Returns Risk Explained

Sequence risk refers to the timing of market returns relative to your withdrawals.

• Negative returns early in retirement can permanently reduce your portfolio

• Withdrawals during downturns lock in losses

• Recovery becomes more difficult over time

Example

Two retirees with identical portfolios and average returns can have very different outcomes depending on whether market losses occur early or later in retirement.

At Greenbush Financial Group, this is one of the most important risks we plan for when building retirement income strategies.

Strategy 1: Build a Cash Reserve Before Retirement

One of the most effective ways to protect your portfolio is to avoid selling investments during a downturn.

Recommended Approach

• Maintain 1–3 years of living expenses in cash or short-term investments

• Use this reserve instead of withdrawing from stocks during market declines

Why It Works

• Gives your portfolio time to recover

• Reduces the need to sell assets at depressed prices

• Provides psychological comfort during volatility

Strategy 2: Use a Bucket Strategy for Income

Segmenting your portfolio into different “buckets” can help manage risk.

Example Structure

Short-Term Bucket (0–3 years)

• Cash, money markets, short-term bonds

• Used for immediate income needs

Mid-Term Bucket (3–10 years)

• Bonds, conservative investments

• Provides stability and income

Long-Term Bucket (10+ years)

• Stocks and growth assets

• Designed to outpace inflation

At Greenbush Financial Group, we often use this framework to align investments with time horizons and reduce sequence risk.

Strategy 3: Reduce Withdrawals During Down Markets

Flexibility is critical when markets are volatile.

Key Adjustments

• Temporarily reduce discretionary spending

• Delay large purchases

• Pause inflation increases on withdrawals

Example

Instead of withdrawing $60,000 during a downturn, reducing withdrawals to $50,000 can significantly improve long-term sustainability.

Strategy 4: Delay Social Security If Possible

Social Security provides a guaranteed, inflation-adjusted income stream.

Why Delaying Helps

• Increases your monthly benefit

• Reduces reliance on portfolio withdrawals early

• Provides more stable income later in retirement

Planning Insight

Using portfolio assets early while delaying Social Security can sometimes improve long-term outcomes. 

Strategy 5: Rebalance and Stay Invested

Market downturns can create opportunities to rebalance your portfolio.

Key Principles

• Avoid panic selling

• Rebalance to maintain target allocation

• Take advantage of lower asset prices

At Greenbush Financial Group, maintaining discipline during downturns is often the difference between success and failure in retirement planning.

Strategy 6: Consider Part-Time Income or Flexible Retirement

Even a small amount of income can reduce pressure on your portfolio.

Benefits

• Reduces withdrawal rate

• Allows more time for investments to recover

• Provides flexibility in spending

Example

Earning $10,000–$20,000 per year can significantly extend portfolio longevity.

Strategy 7: Tax Planning During Market Downturns

Down markets can create tax planning opportunities.

Strategies

• Harvest capital losses to offset gains

• Convert IRA funds to Roth at lower market values

• Manage taxable income to stay in lower tax brackets

At Greenbush Financial Group, we often see that downturns can be an ideal time to implement tax-efficient strategies.

Common Mistakes to Avoid

• Selling investments out of fear

• Maintaining rigid withdrawal strategies

• Ignoring tax planning opportunities

• Failing to adjust spending

• Overreacting to short-term market movements

A Real-World Scenario

Scenario

• Retiree with $1,000,000 portfolio

• Market declines 20% in first year

• Withdraws $50,000 annually

Without Adjustments

• Portfolio drops significantly

• Recovery becomes difficult

With Strategic Adjustments

• Uses cash reserve instead of selling stocks

• Reduces withdrawals temporarily

• Rebalances portfolio

• Delays Social Security

Result

• Improved long-term sustainability

• Reduced sequence risk impact

Final Thoughts

Retiring during a down market does not mean your plan will fail, but it usually does require adjustments. The key is managing withdrawals, maintaining flexibility, and staying disciplined with your investment strategy.

At Greenbush Financial Group, our analysis shows that retirees who proactively adapt their strategy during downturns are far more likely to preserve their wealth and maintain sustainable income throughout retirement.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. Is it a bad idea to retire in a down market?
   Not necessarily, but it increases sequence of returns risk and requires careful planning.
2. How much cash and short-term fixed income should I have in retirement?
   Typically 1 to 3 years of living expenses.
3. Should I stop withdrawals during a downturn?
   Not entirely, but reducing withdrawals can improve long-term outcomes.
4. Can a market downturn ruin my retirement plan?
   It can if not managed properly, especially in the early years of retirement.
5. What is the best strategy during a market downturn?
   Maintain a cash reserve, adjust withdrawals, stay invested, and focus on long-term planning.

Claiming Social Security Early or Late: Which Age Is Right for You?

Deciding when to claim Social Security is one of the most important retirement decisions because it directly impacts your lifetime income. Claiming early at 62 reduces your benefit, waiting until full retirement age (67) provides your standard benefit, and delaying to age 70 increases your benefit significantly. At Greenbush Financial Group, our analysis shows that the right decision depends on your life expectancy, income needs, tax strategy, and overall retirement plan.

How Social Security Benefits Change by Age

Your benefit amount is based on your Full Retirement Age (FRA), which is typically 67 for those born in 1960 or later.

Benefit Adjustments by Claiming Age

• Age 62 → ~30% reduction

• Age 67 → 100% of your benefit

• Age 70 → ~24% increase from FRA

Example

If your FRA benefit is $2,000 per month:

At Greenbush Financial Group, we emphasize that this is a permanent decision that affects income for life.

Why This Decision Matters So Much

Social Security is one of the only income sources in retirement that is:

• Guaranteed for life

• Adjusted for inflation

• Not impacted by market performance

This makes it a critical foundation for retirement income planning.

When It May Make Sense to Claim at Age 62

Claiming early provides income sooner, but at a reduced level.

Situations Where Age 62 May Make Sense

• You need income to retire

• Health concerns or shorter life expectancy

• You want to preserve investment assets

• You are concerned about future policy changes

Trade-Off

• Lower monthly income for life.

At Greenbush Financial Group, we typically see this strategy used when income needs outweigh long-term maximization.

When Claiming at Full Retirement Age (67) Makes Sense

Full Retirement Age provides your standard benefit without reductions or credits.

Situations Where Age 67 May Make Sense

• You want a balanced approach

• You are still working into your mid-to-late 60s

• You want to avoid early reduction penalties

• You are unsure about delaying further

Key Advantage

• No reduction, no delay risk.

When It Makes Sense to Delay Until Age 70

Delaying increases your benefit through delayed retirement credits.

Benefits of Waiting

• Higher guaranteed monthly income

• Better inflation-adjusted income over time

• Increased survivor benefits for a spouse

Situations Where Age 70 May Make Sense

• You have longevity in your family

• You do not need income immediately

• You want to maximize lifetime income

• You are concerned about outliving your money

• You have significant Tax Deferred Assets to drawdown

At Greenbush Financial Group, delaying to 70 is often one of the most effective ways to increase guaranteed retirement income.

The Break-Even Analysis: When Do You Come Out Ahead?

A common way to evaluate this decision is through a break-even analysis.

General Insight

• Break-even age is often around 78–82

• If you live beyond this range, delaying may result in higher lifetime income

Important Note

This analysis does not account for:

• Taxes

• Investment returns

• Spousal benefits

• Personal spending needs

How Taxes Impact Your Social Security Decision

Your Social Security benefits may be taxable depending on your income.

Key Considerations

• Up to 85% of benefits can be taxable

• IRA withdrawals can increase taxation

• Claiming earlier may reduce taxable income in some scenarios

Planning Strategy

Coordinate Social Security with retirement withdrawals to manage your tax bracket effectively.

Spousal and Survivor Benefit Considerations

Married couples should evaluate this decision together.

Key Rules

• Spouse can receive up to 50% of the higher earner’s benefit

• Survivor receives the higher of the two benefits

Planning Insight

Delaying benefits for the higher earner can increase survivor income significantly.

At Greenbush Financial Group, spousal coordination is often one of the most impactful strategies.

A Simple Decision Framework

Instead of looking for a one-size-fits-all answer, consider these key questions:

Ask Yourself

• Do I need the income now?

• What is my health and life expectancy?

• Do I have other income sources?

• What is my tax situation?

• Am I planning for a spouse or survivor benefit?

Common Mistakes to Avoid

• Claiming early without a plan

• Ignoring spousal benefits

• Focusing only on break-even analysis

• Not considering taxes

• Making the decision in isolation from your full retirement plan

Final Thoughts

There is no universally “correct” age to claim Social Security. The best decision depends on your financial situation, health, and long-term goals.

At Greenbush Financial Group, our analysis shows that integrating Social Security into a broader retirement income and tax strategy leads to better outcomes than focusing on the decision in isolation.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. Is it better to take Social Security at 62 or 70?
   It depends on your health, income needs, and life expectancy. Delaying increases lifetime income if you live long enough.
2. How much more do you get by waiting until 70?
   About 8% per year after full retirement age, up to age 70.
3. What is the break-even age for Social Security?
   Typically around age 78 to 82.
4. Can I work while collecting Social Security at 62?
   Yes, but your benefits may be reduced if you exceed income limits before full retirement age.
5. What happens if I delay Social Security past 70?
   There is no additional benefit increase after age 70.

2026 Tax-Efficient Retirement Withdrawals: How to Keep More of Your Money

A tax-efficient retirement withdrawal strategy focuses on minimizing taxes while creating consistent income throughout retirement. The order in which you withdraw from taxable, tax-deferred, and Roth accounts can significantly impact how long your money lasts. At Greenbush Financial Group, our analysis shows that strategic withdrawals can reduce lifetime taxes and increase net retirement income.

Understanding the Three Types of Retirement Accounts

Before building a withdrawal strategy, it is important to understand how different accounts are taxed.

1. Taxable Accounts (Brokerage Accounts)

• Capital gains taxes apply when investments are sold

• Long-term capital gains rates are often lower than income tax rates

• Dividends may also be taxed annually

2. Tax-Deferred Accounts (Traditional IRA, 401(k))

• Withdrawals are taxed as ordinary income

• Required Minimum Distributions (RMDs) apply starting in your 70s

3. Tax-Free Accounts (Roth IRA, Roth 401(k))

• Qualified withdrawals are tax-free

• No RMDs for Roth IRAs

• Provides flexibility for tax planning

At Greenbush Financial Group, we view these three “buckets” as the foundation of any tax-efficient withdrawal plan.

The Traditional Withdrawal Order Strategy

A common approach is to withdraw funds in a specific sequence to manage taxes over time.

Standard Withdrawal Order

1. Taxable accounts first

2. Tax-deferred accounts second

3. Roth accounts last

Why This Strategy Works

• Allows tax-deferred accounts to continue growing

• Delays ordinary income taxes

• Preserves Roth accounts for later years or legacy planning

However, this strategy is not always optimal in every situation.

Why a Blended Withdrawal Strategy May Be Better

Strictly following the traditional order can sometimes lead to higher taxes later in retirement.

The Problem

If you delay withdrawals from tax-deferred accounts too long:

• RMDs can become large

• You may be pushed into higher tax brackets

• Social Security may become more taxable

• Medicare premiums (IRMAA) may increase

A More Strategic Approach

At Greenbush Financial Group, we often recommend a blended withdrawal strategy:

• Withdraw from taxable accounts

• Supplement with partial IRA withdrawals

• Use Roth accounts strategically when needed

This helps smooth out taxable income over time rather than creating spikes later.

Roth Conversions: A Key Tax Planning Tool

One of the most powerful strategies in retirement is converting pre-tax money into Roth accounts.

How It Works

• Move funds from a Traditional IRA to a Roth IRA

• Pay taxes now at current rates

• Future growth and withdrawals are tax-free

When It Makes Sense

• Years with lower income (early retirement before Social Security)

• Before RMDs begin

• When tax rates are temporarily lower

Example

• Convert $50,000 from IRA to Roth

• Pay tax today at a lower rate

• Reduce future RMDs and taxes

At Greenbush Financial Group, Roth conversion strategies are often a cornerstone of long-term tax planning.

Managing Your Tax Bracket Each Year

Instead of focusing only on which account to withdraw from, it is often more effective to focus on your tax bracket.

Strategy

• Fill up lower tax brackets intentionally

• Avoid jumping into higher brackets

• Coordinate withdrawals with Social Security timing

Example

If the 12% tax bracket ends at a certain income level:

• Withdraw just enough from IRA to stay within that bracket

• Use Roth or taxable accounts for additional income needs

This approach allows for more control over lifetime taxes.

How Social Security Impacts Your Tax Strategy

Social Security income can change how your withdrawals are taxed.

Key Considerations

• Up to 85% of Social Security benefits can be taxable

• Additional income from IRA withdrawals can increase taxation

• Timing Social Security can impact your tax plan

Planning Insight

Delaying Social Security while using IRA withdrawals or Roth conversions early in retirement can sometimes lead to better long-term outcomes.

Avoiding Common Retirement Tax Mistakes

Many retirees unintentionally increase their tax burden.

Common Mistakes

• Waiting too long to withdraw from tax-deferred accounts

• Ignoring Roth conversion opportunities

• Triggering higher Medicare premiums (IRMAA)

• Not coordinating withdrawals with tax brackets

• Over-withdrawing in a single year

At Greenbush Financial Group, we often see that small adjustments can lead to significant tax savings over time.

A Simple Example of a Tax-Efficient Withdrawal Plan

Scenario

• Age 62, retired

• $1,000,000 in savings

  • $400,000 IRA

  • $300,000 Roth IRA

  • $300,000 brokerage

Strategy

• Withdraw from brokerage for living expenses

• Convert $30,000–$50,000 annually from IRA to Roth

• Delay Social Security until later years

• Use Roth funds strategically after RMD age

Result

• Lower lifetime taxes

• Reduced RMD impact

• Greater flexibility in retirement

Final Thoughts

A tax-efficient withdrawal strategy is not about following a fixed rule. It is about coordinating income sources, tax brackets, and long-term planning.

At Greenbush Financial Group, our analysis shows that retirees who proactively manage taxes throughout retirement often keep significantly more of their income and reduce the risk of large tax surprises later in life.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. What is the best order to withdraw retirement funds?
   Typically taxable accounts first, then tax-deferred, then Roth, but a blended strategy is often more effective.
2. Are Roth withdrawals always tax-free?
   Yes, if the account meets the qualified distribution rules.
3. What is a Roth conversion?
   It is when you move money from a pre-tax account to a Roth account and pay taxes now to avoid taxes later.
4. How can I reduce taxes on retirement income?
   By managing tax brackets, using Roth conversions, and coordinating withdrawals across account types.
5. Do Required Minimum Distributions increase taxes?
   Yes, RMDs are taxable and can push you into higher tax brackets if not planned for

Is $1 Million Enough to Retire? A Practical Income and Longevity Analysis

A $1 million retirement portfolio can generate meaningful income, but whether it is enough depends on your spending, longevity, and withdrawal strategy. In many cases, a balanced approach suggests withdrawing around 3% to 4% annually, which translates to $30,000 to $40,000 per year before taxes. At Greenbush Financial Group, our analysis shows that $1 million is often a solid foundation, but rarely a complete solution without additional income sources like Social Security.

How Much Income Can $1 Million Generate in Retirement?

The most common starting point is the safe withdrawal rate, which estimates how much you can withdraw annually without running out of money.

Typical Withdrawal Guidelines

• 3% withdrawal rate = $30,000 per year

• 4% withdrawal rate = $40,000 per year

• 5% withdrawal rate = $50,000 per year (higher risk of depletion)

What This Means in Practice

How Social Security Changes the Equation

For most retirees, Social Security becomes a critical piece of the income plan.

Example Scenario

• Portfolio withdrawal (4%) = $40,000

• Social Security benefit = $25,000

• Total annual income = $65,000

This is where $1 million becomes much more realistic.

Key Insight

Without Social Security, $1 million alone often supports a moderate lifestyle. With Social Security, it can support a comfortable retirement for many households, depending on spending habits.

Inflation: The Silent Risk to Your Retirement Plan

One of the biggest risks retirees face is rising costs over time.

Example

• Year 1 expenses = $60,000

• 20 years later at 3% inflation ≈ $108,000

This is why simply matching your current expenses is not enough. Your income needs to grow over time, which will usually require keeping a portion of your portfolio invested.

At Greenbush Financial Group, we emphasize maintaining a growth component even in retirement portfolios to help offset inflation risk.

How Long Will $1 Million Last?

The longevity of your portfolio depends heavily on:

• Withdrawal rate

• Investment returns

• Market volatility

• Lifespan

General Guidelines

• 3% withdrawal → Often sustainable for 30+ years

• 4% withdrawal → Historically sustainable, but not guaranteed

• 5%+ withdrawal → Increased risk of running out of money

Sequence of Returns Risk

Early market downturns in retirement can significantly impact how long your money lasts. This is known as sequence of returns risk, and it is one of the most important planning factors.

What Lifestyle Does $1 Million Support?

The answer varies widely depending on location, spending, and lifestyle expectations.

Likely Scenarios

Modest Lifestyle

• Lower cost-of-living area

• Limited travel

• Paid-off home

• Income need: $40,000–$60,000

Moderate Lifestyle

• Some travel and discretionary spending

• Healthcare costs rising over time

• Income need: $60,000–$90,000

High-Spending Lifestyle

• Frequent travel, luxury expenses

• Higher healthcare and insurance costs

• Income need: $100,000+

In many cases, $1 million alone may fall short for higher spending lifestyles without additional income sources.

Tax Considerations on Retirement Income

Not all $40,000 of income is actually spendable.

Key Tax Factors

• Traditional IRA/401(k) withdrawals are taxed as ordinary income

• Roth IRA withdrawals may be tax-free

• Social Security may be partially taxable

• Required Minimum Distributions (RMDs) begin in your 70s

At Greenbush Financial Group, tax-efficient withdrawal strategies are often the difference between a plan that works and one that struggles.

Strategies to Make $1 Million Last Longer

There are several ways to improve the sustainability of a $1 million portfolio.

Planning Strategies

• Delay Social Security to increase guaranteed income

• Use Roth conversions to reduce future taxes

• Adjust withdrawals based on market performance

• Maintain a diversified portfolio with growth exposure

• Reduce fixed expenses before retirement

Real-World Insight

We often see that retirees who remain flexible with spending and withdrawals tend to have significantly better outcomes than those who follow a rigid income plan.

When $1 Million May Not Be Enough

There are specific situations where $1 million may fall short:

• Early retirement (before age 62 or 65)

• High healthcare costs before Medicare

• Significant debt or mortgage payments

• High inflation environments

• Supporting family members financially

• Market downturns and investment mismanagement

In these cases, additional planning becomes critical.

Final Thoughts

A $1 million portfolio can absolutely support retirement, but it is not a one-size-fits-all solution. At Greenbush Financial Group, our analysis shows that success depends on how income is generated, how taxes are managed, and how flexible the retiree is with spending.

For many households, $1 million works best when combined with Social Security and a well-structured withdrawal strategy.

Rob Mangold

About Rob……...

Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.

1. Can you retire comfortably with $1 million?
   Yes, but it depends on your spending level, location, and whether you have additional income like Social Security.
2. How much monthly income does $1 million generate?
   At a 4% withdrawal rate, about $3,300 per month before taxes.
3. Is the 4% rule still safe in 2026?
   It is a useful guideline, but many financial planners now recommend closer to 3% to 4% depending on market conditions.
4. What is the safest withdrawal rate for retirement?
   Around 3% is generally considered more conservative for long retirements.
5. How long will $1 million last in retirement?
   It can last 25 to 30+ years depending on withdrawal rate, investment returns, and market conditions.

5 Questions Every Business Owner Should Answer Before Starting a Business

By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group

After working with business owners for many years as a financial planner, I’ve seen firsthand that while many new businesses struggle, the ones that succeed usually have something in common: they answered a handful of very important questions before they ever opened their doors.

There’s a well-known statistic that a large percentage of new businesses don’t survive long-term. But the businesses that do succeed usually didn’t just have a good idea — they had a plan, a target market, and a clear understanding of the financial side of running a business.

In this article, we’ll cover five important questions every business owner should be able to answer before starting a business:

• What is your business plan?

• How will you obtain clients?

• What are the costs of starting the business?

• What is your timeline to break even?

• When do you close the business?

These questions may not be the most exciting part of starting a business, but they can dramatically increase your chances of success.

1. What Is Your Business Plan?

There are a million great ideas for businesses. But a business idea is not a business plan.

A solid business plan should outline:

• What product or service are you offering?

• How does the business make money?

• What is your pricing structure?

• Who are your ideal clients?

• How will you onboard new clients?

• What does it cost to produce your product or deliver your service?

• How much do you need to sell to be profitable?

• Who is responsible for what within the company?

• How much money do you need to start the business?

• What is the realistic timeline to profitability?

Without a plan, you’re not running a business — you’re making an educated guess.

That doesn’t mean your plan won’t change. In fact, it almost certainly will. But having a plan gives you something incredibly important: a starting point and something to adjust when things don’t go as expected.

It’s also incredibly valuable to:

• Talk to other business owners in your industry

• Study competitors in your area

• Study competitors outside your area

• Do market research before launching

One thing almost every business owner learns quickly: starting and running a business is harder than it looks from the outside. Expect challenges and be ready to adjust.

2. How Am I Going to Obtain Clients?

This is one of the most important questions a business owner can answer.

Many new business owners make the mistake of trying to sell to everyone. In reality, businesses tend to be more successful when they clearly define their ideal client.

You need to be able to answer two key questions about your potential clients:

1. Do they want what I’m selling?

2. Can they afford what I’m selling?

If the answer to either question is no, the business may struggle.

For example:

• If people want your product but can’t afford it → You have a pricing problem.

• If people can afford it but don’t want it → You have a marketing or product problem.

• If people both want it and can afford it → Now you have a business opportunity.

One of the best things you can do before starting a business is talk to potential customers. Survey them. Ask questions. Have real conversations.

Many business owners are surprised to learn that what they thought people wanted is not actually what people needed or were willing to pay for.

3. What Are the Costs of Starting the Business?

Business owners almost always underestimate how much it costs to start a business.

Costs may include:

• Inventory or materials

• Software and technology

• Website development

• Marketing and advertising

• Rent or office space

• Build-out and equipment

• Insurance

• Accountant and tax preparation fees

• Legal fees

• Payroll or contractor costs

• Licenses and permits

It’s usually wise to overestimate costs and underestimate revenue early on. That creates a financial cushion and helps prevent cash flow problems.

It’s also very helpful to talk with a tax professional or accountant early, because there are many financial and tax-related items new business owners may not be aware of.

4. What Is the Timeline to Break Even?

This question ties directly into the cost of starting the business.

Most businesses do not become profitable immediately. It takes time to:

• Find clients

• Deliver the product or service

• Get paid

• Build consistent revenue

Meanwhile, the business has ongoing expenses.

You should be able to estimate:

• How many clients do I need to break even?

• How long will it realistically take to get that many clients?

• Can I financially survive until that point?

Simple Example:

If your business expenses are $5,000 per month and you make $100 per client, you need 50 clients per month just to break even.

But how long will it take to get those 50 clients?

• 3 months?

• 12 months?

• 24 months?

This is a critical planning question because many businesses fail not because the idea was bad, but because they ran out of money before they reached profitability.

5. When Do You Close the Business?

This is the hardest question on the list, but it may be one of the most important.

Starting a business is exciting. Business owners are proud of what they’re building. They tell friends and family. They invest time, money, and energy into making it work.

But sometimes, despite best efforts, a business simply isn’t going to work long-term.

The danger is when business owners:

• Rack up credit card debt

• Take out personal loans

• Refinance their home

• Drain retirement accounts

• Continue pouring money into a business that isn’t sustainable

I’ve seen situations where business owners didn’t just end up closing the business — they ended up in a much worse financial position than before they started.

That’s why it’s important to define ahead of time:

• How much money are you willing to invest?

• How long are you willing to try?

• What financial metrics need to be met to continue?

• At what point do you walk away?

Closing a business is not a personal failure. Sometimes it’s a financial decision, and making that decision at the right time can prevent long-term financial damage.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

How Does Depreciation Work for Rental Properties?

By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group

Depreciation is one of the most important tax benefits of owning rental property. It allows property owners to offset part of the cost of owning the property against the rental income they receive, which can significantly reduce taxes in the early years of ownership.

In this article, we’ll cover:

• What depreciation is and how it works

• The 27.5-year depreciation rule for rental properties

• How depreciation can offset rental income

• How improvements are depreciated

• What happens when depreciation runs out

• What depreciation recapture is when you sell the property

What Is Depreciation?

Depreciation is a tax deduction that allows rental property owners to recover the cost of a property over time. Even though real estate often increases in value, the IRS allows you to treat the property as if it is wearing out over time and deduct a portion of its value each year.

This deduction can be used to offset rental income, which may reduce how much tax you owe on the income the property generates.

The 27.5-Year Depreciation Rule

Residential rental properties are typically depreciated over 27.5 years.

This means you take the purchase price of the property (excluding land value) and divide it by 27.5 to determine your annual depreciation deduction.

Example:

So, if you purchased a rental property for $300,000, you can depreciate roughly $11,000 per year.

How Depreciation Offsets Rental Income

Depreciation is considered a non-cash expense, meaning you don’t actually write a check for it, but you still get the tax deduction.

Example Scenario:

• Rental income: $11,000 per year

• Depreciation: $11,000 per year

In this example, the depreciation deduction offsets the rental income, which may result in little to no taxable rental income for that year.

This is one of the reasons rental real estate can be a very tax-efficient investment.

Depreciation on Improvements

Many rental property owners make improvements to their property, such as:

• New roof

• New furnace or heating system

• Kitchen renovation

• Bathroom remodel

• Flooring

• Additions

These are called capital improvements, and each improvement typically has its own depreciation schedule separate from the original property purchase.

For example:

• Appliances: Often 5-year depreciation

• Carpeting: Often 5–7 years

• Roof: Often 27.5 years

• HVAC systems: Often 15–27.5 years depending on classification

There are also situations where bonus depreciation or Section 179 may allow you to deduct a larger portion of the improvement cost upfront.

This is an area where working with a knowledgeable tax professional is very important, because depreciation schedules vary depending on the type of improvement.

What Happens When a Property Is Fully Depreciated?

After 27.5 years, the property is considered fully depreciated.

This means:

• You no longer receive the annual depreciation deduction

• More of your rental income becomes taxable

• Your tax liability on rental income may increase

However, you still own the property and still collect rental income — you just don’t get the depreciation tax benefit anymore.

What Is Depreciation Recapture?

Depreciation is a great tax benefit while you own the property, but when you sell the property, the IRS requires something called depreciation recapture.

When you sell a rental property:

1. You pay capital gains tax on the profit from the sale

2. You also pay tax on all the depreciation you took over the years

3. Depreciation recapture is taxed at a flat 25% federal tax rate

Example:

So in this example, when the property is sold, the owner would owe:

• Capital gains tax on the profit plus

• $50,000 in depreciation recapture tax

This surprises many real estate investors if they are not prepared for it.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions (FAQs)

1. How long do you depreciate a rental property?
   Residential rental property is depreciated over 27.5 years.
2. What happens if I don't take depreciation?
   The IRS assumes you took it anyway, and you may still have to pay depreciation recapture when you sell.
3. Can I depreciate renovations on my rental property?
   Yes, but renovations and improvements typically have their own depreciation schedules.
4. What is bonus depreciation?
   Bonus depreciation allows you to deduct a large portion of certain improvements upfront instead of spreading the deduction over many years.
5. Do I have to pay depreciation back when I sell the property?
   When you sell the property, you may be subject to depreciation recapture, which taxes the total depreciation amount taken by 25%.
6. What happens after 27.5 years of depreciation?
   The property is fully depreciated and you no longer receive the annual depreciation deduction.
7. Does depreciation reduce my capital gains when I sell?
   No. Depreciation actually lowers your cost basis, which can increase your taxable gain and trigger depreciation recapture.
8. Can depreciation create a loss on paper?
   Yes. Depreciation can sometimes create a taxable loss even if the property is producing positive cash flow.
9. Should I work with a CPA if I own rental property?
   It's highly recommended. Depreciation, improvements, and recapture rules are complex, and a knowledgeable CPA can help you maximize tax benefits and avoid costly mistakes.