Are you a middling millionaire with $1-$3 million in retirement savings? Be on the lookout for the ‘tax torpedo’

Middling millionaires, defined as those with $1-$3 million in retirement savings, are increasingly vulnerable to a phenomenon known as the 'tax torpedo,' which can significantly raise their tax liabilities. While many have diligently saved through tax-deferred accounts like 401(k)s, their income from withdrawals and Social Security can push them into higher tax brackets, resulting in up to 85% of their Social Security benefits becoming taxable. With careful planning, including early withdrawals and delaying Social Security claims, these retirees can better manage their tax exposure.