I'm delaying SS until 70 also (next year) so I guess my "bird in the hand philosophy" isn't entirely consistent. I'll be getting pretty close to the maximum which is somewhere > $40k/year. I also had a pension but it was discontinued and I received a lump sum distribution which I rolled into my IRA at the time.ochotona wrote: ↑Sun May 13, 2018 6:51 amAs I am getting reasonably close to retirement, I have visibility as to what my future tax brackets might be. Based on the certain return to the old brackets on 1-1-26 just months before my 65th birthday, I am highly likely to benefit from Roth conversion. All of the reasons you state are fine, but in my individual case, I still see a benefit in spite of your list. Everyone else's conclusion will vary.
I have a pension, and I'm going to take SS at 70. Together they will be $75k. That means my possibly $100k IRA distribution on top of that (fingers crossed, c'mon GEM) is going to land into brackets which on 1-1-26 are firmly higher than my current "last dollar" conversion brackets.
I just took a swipe at the Schwab RMD calc, and at age 80 assuming only 5% CAGR my RMD will be $86k if I keep all of my Traditional IRA space. Ugh.
This is an affluenza problem, yes. Not everyone is a candidate for Roth conversion.
I do already have Roth accounts for both me and my wife and we have been contributing the max each year ever since we became eligible. I also have accumulated a considerable amount in taxable and taken together those accounts are pretty much equal to my IRA. Checking into my RMD to start next year I was surprised that it was only $14k. If your wife is > 15 years younger than you, which mine is, different tables are used and the percentage is smaller.
Best I can figure, that $14k will pay the tax on the SS benefit with possibly some even left over. I suspect that situation will continue until my wife also retires and I'm comfortable enough with it for the time being.
One piece of economic advice from Keynes that I can definitely agree with when it comes to long range planning is to keep in mind that in the long run we are all dead. That's more true at my age than ever before but the world could be destroyed by an asteroid tomorrow and then the Roth conversion conversation will end once and for all.