A tax-free Social Security play with a 2028 problem

The least glamorous tool in retirement planning is the arithmetic that decides whether a Social Security check is taxable, and a new strategy paper argues that most advisors are leaving tax-free income on the table. James Mahaney, a principal at Georgetown, South Carolina-based Mavericus Retirement Services, has laid out a withdrawal blueprint that combines traditional IRA distributions with the senior deduction to push a married couple's tax-free income to roughly $92,000 under 2026 law.

Mahaney's framework leans on two IRS provisions: the rule that 15% of Social Security benefits are always tax-free, with the remaining 85% potentially tax-free when modified adjusted gross income plus half of benefits stays at or below $32,000 for single filers and $64,000 for married couples filing jointly, and the senior deduction, worth up to $6,000 per person. For a couple both aged 65, Mahaney proposes withdrawing about $28,000 from a traditional IRA and applying $47,500 in senior deductions, producing about $92,000 in tax-free income.

That math works only for clients below the phaseout ranges, where the senior deduction phases out for single filers with modified adjusted gross income between $75,000 and $175,000 and for married couples filing jointly between $150,000 and $250,000. Wealthier households, Mahaney says, would need smaller IRA withdrawals or some tax under a modified version of the strategy.

The catch is the calendar: the senior deduction is scheduled to expire after 2028, making the strategy a bet on congressional action. Mahaney acknowledges the provision is the part of the proposal that will be 'most brought up and challenged' because it is scheduled to go away, and he argues it will likely be renewed: seniors are the bloc that votes the most, and letting the deduction lapse would come across as raising taxes on them. An advisor can read that as a political forecast rather than a tax certainty, and a prudent plan builds a second scenario without the deduction.

The part of Mahaney's work likely to outlast the deduction is the framework, which treats Social Security claiming decisions and IRA withdrawal sequencing as two sides of the same tax return. Delaying benefits creates a larger, more tax-efficient income stream, and his blueprint pairs that delay with a $28,000 traditional IRA withdrawal at age 65. He says the insight first occurred to him while working on 401(k) product development at Prudential, where he concluded that planners underappreciated the tax benefits of creating larger Social Security streams by delaying them.

The political calendar is a planning input, not a reason to stand still: if the deduction expires after 2028, the strategy's tax-free ceiling shrinks, and an advisor can model both outcomes today — the full version if the provision survives, and the paper's fallback of smaller IRA withdrawals or some tax due if it does not.

The strategy is best understood as a bridge between two planning decisions that are often made separately: when to claim Social Security and how much to take from a traditional IRA each year. Advisors who treat those as independent questions risk letting taxes decide the outcome by default; the paper suggests running one calculation that covers both, starting with the client's projected benefit plus half the benefit, adding modified adjusted gross income, and comparing the total to the $32,000 or $64,000 line before sizing the IRA withdrawal.

The $92,000 figure is the headline, yet the strategy's real value is the threshold. Clients near the phaseout ranges can use the modified adjusted gross income test to plan how much IRA money to withdraw in a given year without crossing into taxable Social Security territory. That tool works with or without the senior deduction. The deduction accelerates the plan; the threshold defines it.

A plan built solely around the senior deduction solves 2026 with a tax provision scheduled to disappear; a plan built around the modified adjusted gross income test holds up after 2028, with the deduction simply making the tax-free number larger while it lasts. That distinction will matter at every client meeting between now and the sunset.

There are limits to the strategy that advisors should state plainly: Mahaney's scenario is built for a married couple both aged 65, and the phaseout means the plan works only for households below the income ranges. Clients with pensions, part-time work, or large taxable accounts would likely push the combined total past the line, changing the math.

The strategy's best use may be as a diagnostic, forcing a question every advisor should be able to answer for a middle-income retiree: how much tax-free Social Security is the client leaving on the table because no one ran the modified adjusted gross income calculation? Advisors who can produce that number will be adding value long after the deduction's fate is settled.