After a lot of anxiety and math, fretting over the "delay social security" and "do Roth conversions" KZread videos, I eventually concluded that the people that make those videos are just creating unnecessary concern, so you'll watch their videos or hire them to manage your money. Yes, it's possible that you could come out ahead doing either or both of those things, but it really doesn't seem to be as much as they would suggest. There are too many variables that you can't predict. The biggest one is how long you're going to live, because either way, you won't start seeing a measurable difference until your mid-80s. Another is where you will be living. I live in a state, now, where social security is not taxed, but 401k and IRA withdrawals are taxed. If I end up in the state where I was born, no retirement income is taxed. And, if your health turns out to be terrible and you need to spend an extended period of time in a long term care facility, you may end up with a lot of deductible medical costs and Roth conversions could prove to have been foolish. So, I've decided to take the money I can't control (Social Security) and keep the money I can control (401k and IRA), rather than delay Social Security. And, beyond consideration of the various expensive mistakes I could make doing Roth conversions, to not pay taxes on those funds, until I have to.

The fear of RMDs is so ridiculous! At age 73, the RMD draw rate is 3.8%. Most people are not going to draw very much at all. The RMD table goes all the way to age 120! No one lives that long. By doing Roth conversions you pay the taxes NOW, a lot of taxes, just to avoid small taxes later.

@thomasmoshier3920

5 күн бұрын

The reason people don’t draw out that much for RMD’s is because their account balances are minimal. Roth conversions are more for your heavy hitters with large balances. It also helps with legacy planning. Decreasing the tax burden to your heirs.

@July.4.1776

5 күн бұрын

@wwz1011 I agree with your statement 100% 👍

@onlywenilaugh6589

5 күн бұрын

@@thomasmoshier3920 Yep, one of the main reasons is to get rid of that tax for loved ones who might be in higher brackets.

@Dave-sw2dm

4 күн бұрын

My goal is to never pay more than the current 12% tax bracket. Easy to do while both myself and my wife are alive. If one of us goes out early into retirement the income level to jump from the current 12% to the current 20% is too low for us. The plan is to pull out as much from the deferred accounts that keeps us in the bracket we will be in based on our income and convert that extra amount into Roth so if we find ourselves alone we can draw from the Roth if needed to save 8% that would go to the Fed.

Excellent content sir - you could do examples like this all day long! Very few people are willing to dive into the exact scenarios and do the math like this and I appreciate you doing it!

I plan to stop working and retire at 65, that leaves me with less than 2 years to full retirement age. So the Social Security bridge will not have to be a huge burden on my retirement savings.

Really if you only have 500k or less, I wouldn't even consider Roth conversions unless you have all living expenses covered by something else and the 500K would just grow. Otherwise, I would start thinking about conversions once you get in the 700-1mm range as a good rule of thumb.

@erictcarrollcarroll1108

5 күн бұрын

So would you also believe that all of your retirement contributions be pre-tax and no Roth contributions unless you are in a high tax bracket?

@onlywenilaugh6589

23 сағат бұрын

@@erictcarrollcarroll1108 if in a low tax bracket while working, I would do Roth. If high, then traditional. Most people are lower tax brackets in retirement even if government raises them a little. Mainly have to worry about getting pushed in higher bracket due to spouse death. Or if want to leave inheritance tax free. If you build up substantial pretax then can always convert later if in lower bracket.

@erictcarrollcarroll1108

13 сағат бұрын

@@onlywenilaugh6589 Thanks. Sounds like it makes sense to me.

@erictcarrollcarroll1108

13 сағат бұрын

@@onlywenilaugh6589 I do pretax 401k. and Roth contributions. I believe my employeer has started offering a Roth version of the 401k. and I think I'll ask about changing to that.

Keep kicking that SS-can down the road and you may runout of road!

@janitoronfire

5 күн бұрын

I don’t trust Uncle Sam. I’m claiming at 62.

@onlywenilaugh6589

5 күн бұрын

@@janitoronfire That's many have said as they collected their measly $1200 a month check for years and years wishing it was more in their 70s. Ya never know but one thig is for sure, it will be "fixed". It might be on the backs of the younger folks which I hate but it will be fixed. WE need to stop sending billions to other countries and put it in SS to shore it up and start back up the SS tax after you make 300K after it stops at current income level

@janitoronfire

5 күн бұрын

@@onlywenilaugh6589 my SS will be in addition to my federal pension, Roth IRA and tsp account. I’m drawing at 62 and moving to a low cost country.

Is it a good idea to take the interest that a company match 401K retirement plan and put it in a Roth IRA account such as Vargard?

Only selfish people drain their investments that they should be leaving for their kids and grandkids....I drew my ss at 62 in order to save my nest egg for my son. I also receive generous VA check each month, which allows me to avoid tapping into my investments. Oh, and did I mention I'm single? Lol

I am fortunate I guess. At work watching this video and commenting. 65, loving my job not drawing social security yet. Debt free, no mortgage, and a very nice IRA Account. I just can't see drawing on my IRA and waiting to draw on social security. I get it he wants to retire. But to me when you die the social security ends so if you used your IRA money there is less of it left for children etc. I know every situation is different. At 66 and 3 months in January of 2025 I will start collecting getting a little over $2,900 a month. But I can still work making up to 60k with no penalty in 2025. I think back to the job before this one which I left in 2006. If I were still there I would have retired already. Had the best benefits ever, but miserable working atmosphere. But with all that being said every situation is different, but I would never wait until age 70 99.9% of the time. Just me I guess.

I'm really, really close to Jay's scenario except I retired at 60 two years ago. I've been converting $26,000 to Roth every year. I really feel like it's the way to go. I can get to 100% Roth before taking SS. The tax torpedo is real and I'll save a solid chunk in taxes using my low current tax bracket. Why would I kick that can down the road? Taxes are only going to go up. Eventually you need a new roof or want to draw a large amount out and in my case the tax torpedo would have taken a large bite of it unless it's Roth money. He's got a chance to avoid that. To me it's not that the RMD's are that much. It's the fact that those majority of those traditional funds are basically unusable except to pass along to some heir. I've been converting hard and things are shaping up better than I had hoped. I say convert Jay!