The amount someone has saved for retirement does not tell the whole story, according to Scot Landborg, CFP and CEO of Sterling Wealth Partners, who says retirees need to understand how their savings fit inside the U.S. tax system before deciding whether they are truly ready to stop working.
In a recent video, Landborg outlined what he called the five levels of retirement wealth in 2026, explaining that a household with $800,000 faces very different questions than a household with $8 million. His main point was that many people compare themselves to generic savings targets, when the more useful question is how their balance will work with Social Security, taxes, required minimum distributions, Medicare surcharges, and income needs over the next 30 years.
That is an important distinction because two retirees with the same account balance can have very different outcomes depending on whether their money sits in traditional retirement accounts, Roth accounts, taxable brokerage accounts, or a mix of all three.
Level One: Under $1 Million
Landborg said the first level of retirement wealth is under $1 million, where Social Security often becomes the main source of retirement income and the portfolio fills the gap.
For a household with a paid-off home and moderate spending, he said this level can work better than many people expect. As an example, Landborg said a couple with $750,000 using a conservative 4% withdrawal rate could produce about $30,000 per year from the portfolio.
When that is combined with Social Security of roughly $45,000 to $60,000, total income may land between $75,000 and $90,000 per year. For many debt-free households, he said, that may be enough to support a comfortable retirement after work-related costs and retirement contributions disappear.
Landborg described the tax picture at this level as fairly favorable. Required minimum distributions, or RMDs, on $750,000 at age 73 would be about $27,000, and when combined with Social Security, income may still remain in the 12% tax bracket with modest taxation on benefits and no IRMAA exposure.
IRMAA refers to Medicare’s income-related monthly adjustment amount, which can raise Medicare premiums for higher-income retirees.
According to Landborg, retirees at this level may keep 88% to 92% of every dollar, giving them higher dollar efficiency than some wealthier retirees who run into more tax thresholds. He said the most important moves here are delaying Social Security if possible, eliminating debt before retirement, and considering moderate Roth conversions during the early retirement years.
This is one of the more useful parts of his framework because it challenges the idea that retirement readiness is only about reaching one large headline number. For some households, lower spending and a paid-off home can do almost as much work as a bigger portfolio.
Level Two: $1 Million To $2 Million
Landborg said the second level, from $1 million to $2 million, is where the system can start working against retirees if they are not careful.
At $1.5 million, he said RMDs at age 73 may force roughly $55,000 in taxable income during the first year. When that is combined with $55,000 to $70,000 in Social Security, total income could reach $110,000 to $125,000.
That can push a household into the 22% tax bracket, make up to 85% of Social Security taxable, and bring the first IRMAA tier into play.
Landborg said this is the range where people often feel comfortable because $1.5 million sounds like plenty, and it can be if it is structured properly. Without planning, however, retirees may face higher tax brackets, maximum taxation of Social Security benefits, Medicare surcharges, and a tougher tax picture for the surviving spouse.
The irony, as Landborg described it, is that someone at level two may save more than someone at level one but keep a lower percentage of each dollar because the higher balance begins crossing thresholds that smaller portfolios naturally avoid.
His suggested move at this level is to consider Roth conversions during the “gap years,” especially before RMDs begin. He said reducing the traditional account balance to around $800,000 to $1 million by age 73 can help keep future RMDs more manageable.
This is where retirement planning starts becoming less about whether someone has enough money and more about where that money is located. A retiree can be wealthy on paper and still create avoidable tax problems if most of the money is trapped in tax-deferred accounts.
Level Three: $3 Million To $5 Million
At the third level, from $3 million to $5 million, Landborg said the conversation changes from basic income planning to what he called “structural engineering.”
Using a $4 million traditional retirement balance as an example, he said RMDs at 73 could reach about $146,000. Combined with Social Security, total income could hit $200,000 to $220,000, putting the household deep into the 24% bracket and moving toward 32%.
Landborg said Medicare IRMAA surcharges could add $8,000 to $14,000 per year for a couple at this level, while the survivor scenario becomes increasingly important. When one spouse dies, the surviving spouse may face single-filer brackets that are narrower, which can make the same income much more heavily taxed.
At level three, Landborg said Roth conversions often need to be larger, sometimes $100,000 to $200,000 per year across the full planning window. He said those conversions may need to happen in the 22% or 24% brackets because the 12% bracket alone is not large enough to move enough money.
He also said retirees at this level should consider building a three-tiered account structure: traditional, Roth, and taxable brokerage assets. Qualified charitable distributions, or QCDs, can also become powerful for retirees who give to charity because they may remove large amounts from taxable income.
The key idea here is that tax strategy becomes more urgent as the portfolio grows. Paying tax earlier through Roth conversions may feel uncomfortable, but Landborg argued that paying 24% now can be cheaper than facing 32% later, along with Medicare surcharges and estate complications.
Level Four: $5 Million To $10 Million
Landborg said that at $5 million to $10 million, income is usually solved, so the focus expands to multi-generational planning.
At a $7 million traditional balance, he said RMDs at age 73 could reach about $256,000. Total income may exceed $310,000, pushing the household deep into the 32% bracket and close to 35%, while maximum IRMAA could add $14,000 to $18,000 per year for a couple.
At this level, Landborg said the heirs become a major part of the planning discussion. Children who inherit a traditional IRA generally have to withdraw the balance within 10 years, and they pay tax at their own marginal rates.
He said a $4 million inherited traditional IRA balance could create $1.2 million to $1.5 million in taxes for the children.
Because the account sizes are larger, Landborg said Roth conversions alone may not fully solve the RMD problem. Instead, retirees may need a coordinated system that includes conversions, QCDs, strategic gifting, and estate planning tools.
Landborg also mentioned dynasty Roth planning, where converting at 24% to 32% may make sense if it helps heirs avoid taxation at even higher future rates.
This is where retirement wealth begins to look less like a personal spending question and more like a family balance sheet. The challenge is not whether the retiree can live well, but how much wealth will be preserved, taxed, gifted, or passed on.
Level Five: $10 Million And Above
At the fifth level, $10 million and above, Landborg said retirees are managing wealth at a scale that requires a coordinated team across tax law, estate law, charitable planning, and investments.
A $10 million traditional retirement balance, he said, could force about $365,000 in RMDs at age 73. Total income could exceed $420,000, pushing the household toward the top of the 35% bracket and close to 37%.
With Medicare surcharges and other taxes included, Landborg said the effective combined rate can exceed 45% to 50%. He also warned that a remaining $7 million to $8 million traditional balance at death can generate $2.5 million to $3.5 million in tax bills on the final return before state taxes are even considered.
At this level, he said planning tools may include irrevocable life insurance trusts, charitable remainder trusts, dynasty Roth conversions, large-scale gifting, and private foundation strategies.
Landborg argued that sophisticated planning can pay for itself many times over by preserving 30% to 40% more wealth for the family.
For retirees in this range, the main issue is no longer whether they can afford retirement. It is whether their estate, tax, and giving plans are built carefully enough to prevent unnecessary leakage.
Why The Account Structure Matters
After walking through the five levels, Landborg said retirees should total their traditional, Roth, and taxable balances, then look at the split between them because the mix can matter as much as the total.
He advised people to project their traditional account balance at age 73, calculate the future RMD, and add Social Security to see what their forced income picture may look like. From there, retirees can estimate which tax brackets, Social Security tax levels, and Medicare surcharge tiers they may hit.
Landborg also said people should identify their conversion runway, meaning the number of years they have before RMDs begin, and model the survivor scenario to see what happens when one spouse is left filing as a single taxpayer.
His larger message is that retirement advice should match the level of wealth someone actually has. Advice meant for a level one retiree may be too simple for someone at level three, while level five strategies may add unnecessary complexity for someone under $1 million.
The most helpful takeaway is that retirement success is not only about the size of the portfolio. It is also about how the accounts are structured, when income is triggered, how taxes are managed, and whether the plan still works after one spouse dies.
Landborg said retirees who run these projections and act on them are likely to keep more of their money and feel more confident than those who follow generic advice. For 2026, his five-level framework shows why some retirees can thrive with less than they expected, while others with far more money may still face serious planning problems if they ignore the tax system.
A former park ranger and wildlife conservationist, Lisa’s passion for survival started with her deep connection to nature. Raised on a small farm in northern Wisconsin, she learned how to grow her own food, raise livestock, and live off the land. Lisa is our dedicated Second Amendment news writer and also focuses on homesteading, natural remedies, and survival strategies. Lisa aims to help others live more sustainably and prepare for the unexpected.
