7 Retirement Withdrawal Mistakes High Earners Are Most Likely To Make in 2026
Written by
Jordan Rosenfeld
Edited by
Molly Sullivan
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For higher earners approaching or already in retirement, withdrawal planning often becomes more complex, not less. Large account balances, multiple income sources and years of tax deferral can create complications when withdrawals begin.
Financial advisors who specialize in high-earning retirees say the biggest risks are rarely market crashes or overspending. Understanding what makes high-earner retirement withdrawals different is the first step toward avoiding expensive surprises.
1. Not Realizing Taxes Are ‘A Different Kind of Retirement Math’
For higher earners, planning for retirement withdrawals needs to go beyond thinking about just how much income to take, but how and when it is taken. Specifically, higher earners need to think more strategically about how their withdrawals interact with taxes, which is what Melissa Cox, owner and CFP at Future-Focused Wealth, called “a different kind of retirement math.” She added that “You can have a seven-figure portfolio and still trigger tax headaches you didn’t see coming.”
Joe Stephens, CFP at Associate Financial Planners, explained that the margin for error is tighter for high earners at this stage because taxes, Medicare premiums and required minimum distributions tend to compound on each other. “So decisions made in the first few years of retirement often determine whether someone stays in control long term or ends up reacting to tax consequences later.”
2. Forgetting About IRMAA Surprises
One of the most common surprises for high earners in retirement is IRMAA, the income-related Medicare premium surcharge. Many high earners underestimate how retirement withdrawals affect Medicare premiums, Cox said. “They think they’re done with taxes in retirement, but those withdrawals can push income high enough to bump premiums and move them into a less friendly tax bracket.”
Even modest income increases can take a big bite, Stephens added. “Even relatively small additional withdrawals can trigger disproportionately large Medicare premium increases two years later, in some cases it’s several thousand dollars per person per year.”
3. Suffering Required Minimum Distribution Problems
Tax-deferred accounts that were essential to retirement savings can become liabilities later. For example, Cox shared, a multimillion-dollar IRA “can feel like a gift” until it’s time for required minimum distributions (RMDs). “Suddenly, you’re required to withdraw more than you actually need, and that extra income snowballs into higher taxes, IRMAA surcharges and fewer planning options,” she said.
Scott Caufield, CFA, CPA and principal and registered investment advisor at Sophos Wealth Management, framed this as a long-term risk, “One of the most common mistakes I see is that new retirees become overly focused on minimizing taxes early in retirement … future RMDs represent a ticking time bomb for taxes.”
4. Sticking To Generic Withdrawal Rules
The order in which accounts are tapped can significantly affect taxes and future flexibility. Generic withdrawal rules fail to account for the complexities of withdrawal timing. “That’s why sequence of withdrawals matters more than people think,” Cox explained. She said a financial advisor will help a retiree look at all their retirement “buckets,” like taxable, tax-deferred and Roth and create a plan that balances tax efficiency and lifestyle flexibility.
It’s important for high earning retirees to avoid generic “spend taxable first” advice, Stephens said, and coordinate withdrawals intentionally.
5. Ignoring the Valuable Early Retirement Tax Window
The period between retiring and starting Social Security or RMDs is often a rare planning opportunity because RMDs or Social Security offer unusually low taxable income. Advisors view this period as a critical planning opportunity. “Roth conversions are often a powerful tool here, especially in early retirement years when income dips,” Cox said. “That window before RMDs start? Gold.”
Another option is to “realize capital gains” at this stage, Caufield said.
6. Delaying Planning
Many higher earners delay withdrawal planning because they are used to focusing on saving, not spending. Cox said a common mistake she sees retirees make is “waiting too long to plan.” She added that “higher earners are used to focusing on accumulation. But retirement is about distribution and if you’re just following the 4% rule, you’re missing major tax opportunities.”
Failing to plan early can lock in avoidable tax outcomes. Stephens agreed. “The most common mistake I see is relying on generalized withdrawal rules without considering how all of these variables interact over time.”
7. Thinking Withdrawal Planning Is Just About Taxes
For higher earners, the goal isn’t to eliminate taxes entirely, but to manage them while preserving lifestyle options.
“At the end of the day, retirement planning is about more than the numbers,” Cox said. “It’s about making sure your money supports your lifestyle without surprises.”
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