Imagine planning for decades to help secure your financial future, only to watch a substantial portion of your savings disappear to unexpected taxes after losing your spouse. For millions of women, this scenario isn’t just a possibility—it’s a reality they face without proper preparation. Tax planning isn’t merely about numbers on a form; it’s about preserving your independence, protecting your family’s financial security, and safeguarding the legacy you have worked so hard to build.
Women are increasingly becoming the primary stewards of wealth, with projections showing they will inherit over $51 trillion in the next two decades. Understanding how taxes affect women differently than men—particularly regarding longevity, widowhood, and legacy planning—is essential for securing your financial future. Read below for four aspects of tax planning that women need to be aware of if they want to help protect and growth their wealth.
The Widow’s Penalty is a Very Expensive Penalty and is often Overlooked
One of the most overlooked financial risks women face is the “widow’s penalty.” This penalty occurs when a spouse dies, and the surviving partner faces a steep tax rate increase when going from filing jointly to filing single. For example, take a couple with $85,000 of taxable income and then one spouse dies. The surviving partner may go from the 12% tax bracket (married filing jointly) to the 22% bracket (filing single). According to 2025 IRS tax brackets, this shift can result in nearly doubling your tax bill, going from around $10,200 to $18,700.
And it doesn’t stop there! As the surviving spouse, you may also face higher Medicare premiums due to IRMAA surcharges. A couple with $225,000 in income would pay $6,000 in IRMAA surcharges, while a surviving spouse could pay $7,380 alone. As women often outlive their partners, this tax burden frequently falls on them.
Hypothetically speaking, consider David and Linda, a couple with a successful business resulting in taxable income of $350,000 (putting them in the 24% marginal tax bracket in 2024). Tragically, Linda passed away unexpectedly. The following year, David continued managing the business and had taxable income of $330,000, now filing as Single. David will now be pushed into the 35% marginal tax bracket for 2025, significantly increasing his income tax liability.
With this, there was also an impact on Medicare costs via IRMAA. When filing jointly, David and Linda’s joint MAGI of $350,000 placed them in the Tier 4 surcharge bracket for MFJ filers in 2024 (based on their 2022 MAGI), creating a surcharge of $454.20 per person per month (in addition to their standard Medicare Part B premium). When filing single, if David continues to have a MAGI of $330,000 (once it cycles through the two-year lookback), he would be in the Tier 5 surcharge bracket (using 2025 surcharge brackets, this would be a $591.90 per month surcharge). Therefore, you can see how Medicare premiums are often another tax penalty for widows.
This is why planning ahead is essential. At Bloom Wealth Advisors, we utilize strategies like Roth conversions and strategic withdrawals for women while married to help you take advantage of the more favorable married filing jointly brackets before widowhood.
Longevity Planning Matters More for Women Because they Live Longer
According to the National Institute of Health, on average, women live five to seven years longer than men. This is true even with lifespans continuing to increase with every generation. In fact, according to the Stanford Center on Longevity, when you have a healthy couple at age 65, there is a 50% chance that one of you will live until age 92. Living longer means you must plan for more years of retirement income and more years of taxes.
That’s why we consider longevity management strategies to ensure your money will not run out. In short, think about what challenges older age may present for you and how to pay for it all. And remember that during that increased lifespan of 30-40 years in retirement, more years of living and portfolio growth means a growing tax bill. In fact, for many of our clients, taxes may be their largest expense in retirement. So, you need to be thinking about it now!
At Bloom, we make sure you understand what income your portfolio will provide monthly and what your Social Security options are. Additional longevity considerations include: healthcare and caretaking expenses, possible downsizing plans, relocation, tax strategies, and legacy planning. In general, it costs more to live longer so it is important to plan for longevity to help ensure you do not run out of money.
Focus on Driving Down Lifetime Taxes
Although not discussed nearly enough, lifetime income taxes are some of the most significant expenses that retirees face and may be the most significant expense in retirement. Working with a tax-savvy financial advisor can save you hundreds of thousands of dollars (and maybe millions) through understanding the tax code and making tax- smart decisions. This is especially important because your extended lifespan means you need more income for more years, while potentially paying higher tax rates as a single filer.
The financial implications here are significant. For example, if you have $2.5M in a traditional IRA, that balance could grow to over $5M in 15 years with a 7% return. Without planning, required minimum distributions (RMDs) could reach $200,000 annually in your 80s and even $500,000 in your 90s. After the first spouse dies, that burden likely shifts to the surviving partner—usually the wife—who is taxed at the higher single filer rate (32% for the income bracket in 2025).
For example, consider someone with a $4 million traditional IRA balance in their early 60s. They are entering the “golden window” that starts at retirement through age 70, where income is low and larger Roth conversions can be performed to fill up the lower tax brackets (and help to start chipping away at large IRA balances). Based on their projected income, expenses and account values, assume they perform Roth conversions of $100,000 each year for 5 years (2025 – 2029) with a moderate ~6% annual rate of return.
By executing these Roth conversions, the projections show there will be over $3 million in Roth assets and about $3.8 million in traditional IRA assets remaining at the surviving spouse’s age 95 (opposed to $0 in Roth assets and $4.5 million in traditional IRA assets at age 95 if no Roth conversions are performed). For heirs, this means potentially tax-free distributions from a $3M Roth IRA during the required 10-year withdrawal period, rather than facing substantial ordinary income taxes on the entire inherited IRA (a striking difference)!
Additionally, recent legislation has created new urgency around retirement account planning as part of your overall estate strategy. The SECURE Act dramatically changed how retirement accounts can be passed to the next generation. Instead of allowing beneficiaries thirty-plus years to withdraw inherited funds (the old “stretch” provision), most non-spouse beneficiaries now must empty inherited retirement accounts within just ten years. This can force your children to take distributions during their peak earning years, potentially pushing them into higher tax brackets and significantly reducing the value of your legacy. This makes strategic IRA management an essential component of modern legacy planning for women who want to maximize what they leave behind.
Women Are Great Estate and Legacy Planners
Making sure that you have enough assets to support your lifestyle is playing “good defense.” However, once you know that you have enough assets to support your lifestyle, then you may want to maximize your legacy for beneficiaries by going on “offense.”
After a spouse passes, many women are left managing the family’s wealth, philanthropic giving, and legacy. In fact, 90% of women will eventually manage their own finances and, therefore, the family legacy. However, women in this stage of life often need more specialized services from their advisor and other professionals to meet their goals. Most women tend to prioritize holistic financial planning, including longevity, estate, and charitable giving.
Proactive estate planning is especially important now. The current estate tax exemption ($13.9M per person in 2025) is scheduled to drop by half if there is no congressional action. For couples with combined estates above $10–12M, now is the time to act. Waiting may result in fewer options and higher taxes for your heirs. Popular strategies like family limited partnerships and Grantor Retained Annuity Trusts (GRATs, which are irrevocable trusts that minimize taxes on large financial gifts) may face limitations in the future, so consider implementing these sooner rather than later if appropriate for your situation.
Additionally, charitable giving can help reduce IRA and estate taxes. A Bank of America Study shows that 85% of affluent households’ giving decisions are made or influenced by women. If charitable giving is a priority for you, ask about tools like Qualified Charitable Distributions (QCDs), Donor-Advised Funds (DAFs), and Charitable Gift Annuities (CGAs) that allow you to support causes you care about while reducing income and estate taxes.
Due to women’s increasing longevity and their tendency to outlive their partners, tax planning is fundamentally a women’s and family issue. By working with your financial advisor to address the widow’s penalty, prepare for a longer lifespan, and create a meaningful legacy, you can secure your financial independence while ensuring your life’s work continues to make an impact for generations to come. The strategies you implement today may determine not just the taxes you pay tomorrow, but the financial confidence you enjoy throughout your lifetime.
This article is not intended to provide specific legal, tax or other professional advice. For a comprehensive review of your personal situation, always consult with a tax or legal advisor.
Some IRAs have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney. Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 1/2, may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 1/2 or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes. Converting from a traditional IRA to a Roth IRA is a taxable event.
Investment advisory services offered through CWM, LLC, an SEC Registered Investment Advisor. Carson Partners, a division of CWM, LLC, is a nationwide partnership of advisors. 8034039-0625_CT
About Carson Tax Solutions
Carson Tax Solutions, led by Chief Tax Strategist Debbie Taylor, CPA/PFS, JD, is a comprehensive program of proprietary tax strategies, robust financial planning, and proprietary client communication tools and practices. Carson Tax Solutions offers a differentiated advantage exclusive to Carson advisors for the benefit of every client.
Carson Partners 14600 Branch St.
Omaha, NE 68154
Fax: 402.330.1668
Toll-Free: 888.321.0808
carsongroup.com
