I Asked ChatGPT How To Pay Fewer Taxes in Retirement: Here’s What It Said

I think a lot about retirement: when, how, if. Sure, I save. So does my husband. But I see headlines cropping up all the time about retirees outliving their money, or returning to the workforce (or both), and they're sobering.

Among the many future unknowns, my elder-year tax bill looms heavy. And since I quiz ChatGPT on just about everything, why not ask it something more practical, like how to avoid penury in my old age?

So, I asked ChatGPT how to pay fewer taxes and avoid wasting money in retirement, and here's what it had to say.

Balance withdrawals between different accounts

According to ChatGPT, mixing money pulled from traditional IRAs, Roth IRAs, and taxable accounts can help you manage your taxable income on a year-to-year basis. By choosing carefully which bucket to draw from, retirees can smooth out tax brackets and avoid triggering higher rates or surcharges on benefits.

This is sound advice. The traditional approach is to withdraw first from taxable accounts, then tax-deferred accounts, and then Roth accounts. However, a proportionate withdrawal approach — withdrawing a percentage-based amount across all accounts — can often reduce the tax impact and extend the portfolio's life.

Do Roth conversions strategically

ChatGPT says that converting to a Roth in lower-income years can mean paying less tax now and enjoying tax-free withdrawals later.

Strategic Roth conversions are savvy advice. You don't need to rollover all 401(k) funds into your Roth in one backdoor conversion event. You can spread out the transfer over several withdrawals, converting small planned amounts during lower-income years to minimize tax impact.

Time Social Security benefits wisely

It's advice then turned to Social Security. ChatGPT recommended delaying Social Security past full benefits age in order to increase monthly payments.

This is true. Delaying Social Security until age 70 — past your full retirement age — boosts your monthly check by about 8% per year. Small boosts make a big impact over time. An extra $200 a month, over 20 years, adds up to $48,000.

Use qualified charitable distributions (QCDs)

ChatGPT also has practical advice on legacy gifting. It recommends giving to qualified charities directly from your IRA if you are age 70 ½ or older, thus lowering your taxable income while meeting your philanthropic goals.

This advice checks out. The IRA sends money directly from your account to the designated, qualifying charity. For 2026, the maximum QCD amount is $111,000 per individual. If you're married filing jointly, and both spouses are eligible, you can each give up to that limit for a combined total of $222,000.

Watch required minimum distributions (RMDs)

Watch out for required minimum distributions, warns ChatGPT. It cautions that once RMDs kick in, you can't avoid them, but planning withdrawals before they start can keep you in a lower bracket.

This ChatGPT advice is accurate. If you do not take RMDs when required, you'll pay a 25% penalty in addition to the ordinary income tax rate. The RMD age is 73 for those born between 1951 and 1959, and will be 75 for those born in 1960 or later.

Consider relocating to a tax-friendly state

ChatGPT also suggested I consider retiring in a state with no income tax to shrink my tax bill.

There are nine states with no state income tax; however, relocation is not an automatic savings win. After factoring in housing, property insurance, cost of living, and sales taxes, a big move could wind up costing you more money in the long run.

Keep taxable income below Medicare thresholds

According to ChatGPT, staying under certain income limits can avoid higher, income-based Medicare premiums.

This is true. Going over the income-related monthly adjustment amount (IRMAA) threshold triggers surcharges on Medicare Parts B and D. To stay under the limits, you could favor many Roth and low-gain taxable withdrawals in peak-income years and dial back 401(k) draws.

Manage capital gains in taxable accounts

Next, ChatGPT suggested selling investments in years with lower income to qualify for the 0% long-term capital gains tax rate.

In some scenarios, this does make sense. According to Charles Schwab, if your taxable income for the year is low enough, you can sell long-held investments and have some (or all) of those gains taxed at 0%.

Take advantage of tax credits for seniors

ChatGPT advised me that certain credits, like the Credit for the Elderly or Disabled, could help me lower my tax liability.

Government sources confirm that the Credit for the Elderly or the Disabled can help reduce your tax bill if you're 65 or older, or permanently disabled, and meet certain income limits. While the calculation starts with base amounts between $3,750 and $7,500, the actual credit is 15% of that amount and may be reduced further based on your income.

Claim the higher standard deduction after age 65

In its final bit of advice, Chat GPT suggested I claim the higher standard deduction after age 65. If you don't itemize, it says a bigger automatic deduction lowers the income you're taxed on.

This nugget of wisdom is pretty straightforward. Once you hit 65, the IRS gives you an increased standard deduction. Certain individuals may not be eligible, though, such as nonresident, dual-status aliens, or those filing as an estate, trust, or partnership.

Bottom line

ChatGPT's best ideas boil down to timing — what you pull, when, and where — so you can keep your tax bill in check. The best course of action today may look wildly different in a year or two, with your portfolio dependent on market swings.

While directionally sound, ChatGPT's tax advice lacks the nuance (and fiduciary guardrails) a human planner brings. Consider talking to a professional.

And as you mull over your retirement taxes, consider looking into a QLAC (Qualified Longevity Annuity Contract). This specialty IRA annuity can help you shrink future RMDs and guarantee a future stream of income later in life.

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