Most of the Roth IRA discussion you hear is usually aimed at younger investors — people early in their careers, looking to lock in their lower tax brackets now and reap the tax-free growth down the line. That narrative is everywhere. But strangely, you don’t hear much about how Roth IRAs can still be useful (maybe even more useful) after you retire.
Especially if you’re already sitting on a decent-sized Traditional IRA or 401(k) — which a lot of retirees are. The Roth angle becomes not just about future taxes, but about how those taxes can spill over into other parts of retirement that few think about. Like Medicare premiums. Or Medicaid eligibility. Or even the taxes your kids might owe someday when they inherit.
Let’s walk through a few of those.
The Medicare “stealth tax” and why Roth helps
Once you hit 65 and start Medicare, your premiums aren’t set in stone. They go up based on your income. Not just any income — but something called IRMAA (Income-Related Monthly Adjustment Amount). It’s a tiered system. Higher income → higher premiums. Sometimes dramatically higher.
And here’s the catch: distributions from Traditional IRAs count as taxable income. So if you’re pulling out $50k–100k a year from a Traditional IRA — which isn’t unusual for retirees — it might bump you into a higher IRMAA bracket. And suddenly your Medicare Part B and D premiums are hundreds (or even thousands) more per year. Just because of the type of account you’re withdrawing from.
Roth IRA withdrawals? They don’t count toward that income calculation. So if you can fund more of your retirement spending with Roth dollars, you may end up in a lower bracket — and pay less for the exact same Medicare coverage. That’s the definition of a stealth tax.
So, the benefit here isn’t just “tax-free” income. It’s also what stays hidden from other income-based formulas.
Could it help qualify for Medicaid? Maybe.
This one’s more fringe, but still worth mentioning. If someone ends up needing long-term care — and wants help from Medicaid — the rules vary wildly by state. But in general, Medicaid eligibility is based on both income and assets. But MediCal, the Medicaid version in California, actually has no asset limit in its eligibility. But many other states do have strict and very low asset limit.
Now, Roth IRAs are assets, so they don’t magically disappear. But the distributions from them — if handled right — don’t always count as income. And if your assets are structured mostly in Roth IRAs and your income is modest (say, from Social Security and a small pension), you might squeak under the limits in some states.
We’re not suggesting this as a strategy to “hide wealth.” But in borderline cases, where someone has high retirement assets but low actual income, Roths could slightly tilt the math in your favor.
It’s a grey area — as always, the government is very good at finding ways to count what you have. Still, there’s at least a possibility that the Roth structure makes you appear “poorer” on paper than someone pulling the same money from a Traditional IRA. And sometimes that’s useful.
Inheritance and estate differences
This is maybe the most overlooked — and underrated — benefit of the Roth for retirees. Not even about your own taxes, but the taxes your heirs will face.
Let’s say you pass on a Traditional IRA to your kids. They’ll need to withdraw all the funds within 10 years (post-SECURE Act). And every dollar they take out is taxed as ordinary income — on top of whatever their job or other income already is. So they’re not just inheriting your money. They’re inheriting your tax bomb.
Now let’s say you leave them a Roth IRA instead. Same rule: they still need to drain it in 10 years. But those withdrawals? Tax-free. No matter their income, no matter how high tax rates are by then. And for those 10 years, that Roth continues to grow tax-free as well. That’s a gift with a very different shape.
It’s a bit counterintuitive — you’re the one paying the taxes upfront during life, but your heirs get the clean benefit later. So Roths are kind of a tax-paid inheritance. Quiet, but powerful.
But are Roth IRAs subject to estate tax? Yes.
This trips people up. Just because Roth IRA withdrawals are tax-free doesn’t mean they’re excluded from your estate. The full value of the Roth IRA is still included in the total estate for estate tax purposes when you die. It doesn’t get a pass.
For most people, that’s not a problem. The federal estate tax exemption is high — $13.61 million per person in 2024, though it’s set to drop in 2026 unless extended. But if your estate is above that line, the Roth IRA counts toward it. And some states have their own estate or inheritance taxes, with much lower thresholds.
Still — even if estate tax applies, the Roth has one big advantage: your heirs don’t owe income tax on what they receive. So they may still owe estate tax, yes. But the distributions they take? Clean. No more taxes due. Which is not at all the case with Traditional IRAs.
And estate-wise, Roths also avoid RMDs during your lifetime (unlike Traditional IRAs), so you don’t have to take out more than you need just to satisfy the rules. That helps the account grow more, stay more intact — and become a more meaningful legacy tool.
So are Roth IRAs good for retirees?
In general, yes.
Now, to be fair, the typical “Roth vs. Traditional” debate usually assumes you’ll be in a lower tax bracket in retirement — so why pay the taxes now? That logic still holds in many cases. But it misses the second-order effects: Medicare premiums, estate planning, even just having flexibility in how you fund your lifestyle. And those can be just as valuable.
Plus, there’s nothing stopping you from converting some of your Traditional IRA into Roth in retirement, slowly, over time. Especially in low-income years, or when markets are down. A small Roth conversion today might save you a large Medicare surcharge five years later.
Like most good strategies, this isn’t about maximizing — it’s about optimizing. A bit here, a bit there. The goal isn’t to avoid taxes completely, but to choose when and how you pay them.
In short: Roths can give retirees more control. Over taxes, over benefits, over legacy. And in retirement, control might be the most underrated asset of all.