For decades, retirees have often heard a simple rule for drawing down their savings: spend taxable assets first, tax-deferred accounts like traditional IRAs second, and Roth accounts last.
The logic is straightforward. If you can leave money inside a traditional IRA longer, it continues growing tax-deferred.
But tax deferral is not always the same thing as tax savings.
In some cases, deliberately recognizing IRA income earlier — through withdrawals or Roth conversions — can allow retirees to use deductions and lower tax brackets that might otherwise go unused. Waiting until required minimum distributions begin could mean eventually taking the same dollars out at a higher tax rate.
Consider a married retired couple receiving $64,000 per year in Social Security benefits. Under the Social Security tax formula, only half of those benefits, $32,000, initially counts toward what the IRS calls “provisional income.” For a married couple filing jointly, Social Security does not begin becoming taxable until provisional income exceeds $32,000.
That means the couple can receive the entire $64,000 benefit without any of it initially being subject to federal income tax.
The couple also has approximately $47,500 of available deductions in 2026. That gives them room to take roughly another $28,000 from a traditional IRA. The IRA withdrawal causes a portion of their Social Security to become taxable, but the resulting taxable income still remains below their available deductions.
The result: approximately $92,000 of annual cash flow while owing no federal income tax. The Financial Planning article highlighting the research focuses on the same strategy.
The $28,000 IRA withdrawal is not inherently tax-free. It is taxable income. The opportunity comes from intentionally recognizing that income during a year in which the couple's deductions are sufficient to offset it.
And that distinction matters.
Imagine instead that the couple follows the conventional advice and leaves the IRA untouched because their Social Security and taxable savings already cover their expenses. They may report very little taxable income today, but they are also allowing deductions and low tax brackets to go unused.
Meanwhile, their IRA continues growing.
Eventually, required minimum distributions will force money out of the account whether they need it or not. If those future distributions are larger, more of their Social Security could become taxable, and they could find themselves paying 12%, 22%, or more on dollars they might have been able to recognize much more efficiently earlier in retirement.
That does not mean every retiree should start taking large IRA withdrawals.
Every situation is different. Social Security benefits, pensions, investment income, filing status, deductions and future RMDs all affect how much IRA income can be recognized efficiently. Mahaney's analysis is also explicitly illustrative and assumes provisions of current tax law that are not necessarily permanent.
The larger lesson is more durable:
The goal should not simply be to defer taxes for as long as possible. It should be to recognize taxable income when the cost of doing so is most favorable.
If a retiree needs money for living expenses, that could mean taking a traditional IRA withdrawal sooner than the conventional withdrawal hierarchy would suggest.
If the money is not needed for spending, a Roth conversion may accomplish the same tax-planning objective while keeping the assets invested for the future.
In either case, the question is the same: Is there IRA income we should intentionally recognize today rather than leave for a potentially more expensive tax year later?
At Hanover, we believe retirement income planning should look beyond which account to spend first. Coordinating Social Security, IRA distributions, Roth conversions and the tax return across multiple years can help determine not merely when taxes are paid, but how much is ultimately paid.