Retirement Starts Today Estimated Taxes Are a Pain. Let's make it Easier
Mar 30, 2026
They dig into rising estimated tax penalties and why retirees and investors are getting caught. Practical tactics for avoiding penalties like withholding, safe-harbor rules, and annualized income reporting are discussed. The conversation shifts to balancing growth and income in retirement portfolios and how to build a multi-year cash/bond runway. A listener story highlights active, optimistic retirement life.
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Why Estimated Tax Penalties Are Rising
- Estimated tax penalties have surged because interest rates rose and underpayments increased.
- IRS safe harbors (90% current year or 100%/110% of prior year) and annualized income can prevent or reduce penalties for retirees with irregular income.
Use IRA Withholding To Avoid Quarterly Estimates
- Use withholding from retirement accounts to avoid quarterly estimated payments if you're over 59½.
- Withholding counts as paid evenly through the year, so you can square up taxes at year-end and potentially earn interest in a money market until then.
File Schedule AI For Late Year Income
- File Form 2210 Schedule AI to annualize income when you have large late-year taxable events.
- This recalculation can eliminate penalties when most taxable income (e.g., Roth conversions or capital gains) occurred late in the year.
