Taking a step back from your high-stress career because perimenopause has you running on fumes? Here's what no one tells you: that "reduced income" year isn't a financial setback—it's your golden ticket to some serious tax savings.
INSIDE THIS ISSUE
Turn your low-income year into thousands in tax savings (yes, really)
Lock in today's cheaper tax rates before your income bounces back
Use the "gap year" strategy that rich people have been quietly using forever
WHEN LIFE HANDS YOU SMALLER PAYCHECKS
Let me tell you about the conversation I have at least once a week: brilliant women stepping back from killer careers because their bodies said "absolutely not" to the current pace.
Maybe you're:
Consulting part-time instead of that 60-hour corporate grind
Taking a full sabbatical to figure out what's next
Working reduced hours because full-time feels impossible right now
The thing we all do? Panic about the smaller paycheck like we've somehow failed at life.
But here's what nobody tells you... when your income drops, you pay less in taxes. Way less. And if you're smart about it, you can use this lower tax year to move money around and save yourself thousands down the road.
Think of it like this: taxes work like airline pricing. Sometimes you pay full price, sometimes you catch a sale. Your reduced-income year? That's your tax sale moment.
THE MOVE THAT CHANGES EVERYTHING
Time to turn your "step back" year into a financial win. Here's how:
The Basic Idea (Stay With Me Here)
You probably have money in old 401(k)s or traditional IRAs
When you take that money out later, you'll pay taxes on it
Right now, while your income is lower, those taxes are cheaper
So you can move some of that money to a Roth IRA (where it grows tax-free forever)
Translation: Pay the cheaper tax now instead of the expensive tax later
How Much Cheaper Are We Talking? Let's say you usually make enough to be in the 24% tax bracket:
Normally, you'd pay $2,400 in taxes on every $10,000 you convert
But this year, if you're in the 12% bracket, you only pay $1,200
That's $1,200 you just saved by timing it right
Scale that up to $50,000? You save $6,000 in taxes
The Smart Way to Do This
Don't convert everything at once (that could push you back into higher brackets)
Convert just enough to "fill up" your current low tax bracket
If you're taking multiple years off or working reduced hours, spread it out
Each low-income year = another chance to convert at cheaper rates
The Sweet Spot Years (Ages 62-70) If you're in this zone, you hit the jackpot:
No job income requirements
Social Security hasn't started yet (which would increase your taxable income)
You control exactly how much income you have each year
Convert retirement money to Roth before Social Security kicks in and pushes your taxes back up
Why This Works
Every dollar you convert now at these lower tax rates becomes completely tax-free forever. When you're back to earning more (and paying higher taxes), that Roth money just sits there growing... completely untouchable by the IRS.
Your future high-earning self will want to send your current lower-earning self a thank-you card.
Share this with 3 women who are stepping back right now. Because turning your career slowdown into a tax win? That's the kind of game-changer we all deserve.