This example from the second edition of my book, “Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success” (Retirement Researcher Media, 2023), shows how strategic tax planning alongside delayed Social Security claiming can increase portfolio longevity and legacy in retirement. Specifically, we examine the case for a 62-year-old couple that has just retired in 2023. They have $2.5 million of investment assets, divided between $500,000 in a taxable account, $1.7 million in a traditional tax-deferred individual retirement account (IRA), and $300,000 in a tax-exempt Roth IRA. The cost basis for their taxable assets is also $500,000.

Their goal is to spend $120,864 per year in retirement, net of any federal income taxes until age 85, and then $95,245 per year afterward. They live in a state that does not tax income. For Social Security, I simplified to make them a one-earner couple. The primary insurance amount is $30,000 per year for the worker. The couple will get $32,250 if they both claim at age 62 and $52,200 if they claim at age 70. For their retirement finances, the priority is to build a financial plan that will cover their spending goals through age 95. When meeting spending goals, a secondary priority is to maximize the aftertax surplus of wealth for their beneficiaries at age 95. For this case study, all strategies succeed in meeting the spending goal so that we can focus on which strategy provides the largest legacy.

The couple must pay federal income taxes—an additional expense that will be estimated beyond their spending goals. I calculate taxes on the portfolio distributions, including interest from the taxable account, the ordinary income generated from IRA distributions, the precise amount of taxes due on Social Security benefits, any Medicare premium surcharges if modified adjusted gross income (AGI) exceeds the relevant thresholds and any potential net investment income surtaxes due. These taxes are calculated based on the tax law in 2023, including the shift to higher tax rates in 2026 that is part of the sunsetting provisions in current law. Tax brackets increase with inflation, though the thresholds for determining taxes on Social Security and the net investment income tax are not adjusted for inflation. Our couple uses the standard deduction instead of itemizing.

This example does not incorporate asset location issues and long-term capital gains management, as I follow the funded ratio assumption that all funds are invested in bonds to see if the financial plan can work without taking market risk. This simplifies real (inflation-adjusted) investment returns to be 1.75% with inflation of 2.5% for an overall 4.29% return. Investments are held in bonds and provide 4.29% taxable interest payments annually without potential for capital gains or losses. While investment returns are simplified, the full tax code has been built into the example.

Table 1 summarizes the overall results for this case study. It shows four different strategies, all of which support the spending goal through age 95. The difference is the aftertax legacy value of investment assets at the planning age. To determine the aftertax legacy value, taxable assets receive a step-up in basis at death, providing their full value for heirs. Tax-deferred assets maintain their embedded income tax liability after death. I assume that adult children will be beneficiaries, and the SECURE Act would require them to spend down the account within a 10-year window when they may still be in their peak earning years and face higher tax rates. To reflect this, I assume that remaining tax-deferred assets will be taxed at a 25% rate to reduce their legacy value to heirs. Tax-exempt Roth assets also face the same distribution requirements, but they will not be taxable to heirs, so their full value passes as legacy. Note that this goal of maximizing aftertax legacy values is not necessarily the same as minimizing taxes, as more wealth can lead to more taxes while also providing greater aftertax wealth.

Table 1. Tax-Efficient Retirement Income for a 62-Year-Old Couple

The Four Strategies

The first strategy (Conventional Wisdom, Social Security at 62) is to claim Social Security at age 62 and to follow the conventional wisdom for spending down assets: Take any required minimum distributions (RMDs), then spend the taxable portfolio, then the tax-deferred portfolio and then the tax-exempt portfolio. If RMDs and Social Security add up to more than the spending need, the excess is invested in the taxable account. This strategy supports $195,657 of legacy in today’s dollars.

The second strategy (Roth Conversions to Target 7% Incremental Average Tax) continues with claiming Social Security at 62, but it uses a more tax-efficient drawdown strategy that supports $234,693 of legacy. The answer for creating tax-efficiency beyond the conventional approach generally involves spending from a blend of taxable and tax-deferred assets to meet expenses and to potentially make Roth conversions to generate more taxable income beyond what is needed to cover current spending, while taxable assets remain. Once taxable assets are depleted, the retiree then shifts to spending a blend of tax-deferred and tax-exempt assets to control the amount of taxable income and taxes, which might also include Roth conversions, in a manner that allows for the greatest aftertax spending and legacy potential for investment assets.

The next set of strategies also shows the value of delaying Social Security. First, the couple claims Social Security at 70 and uses the conventional wisdom spend-down strategy (Conventional Wisdom, Social Security at 70). This increases the legacy for the investment assets to $379,192. The final strategy uses age 70 claiming along with Roth conversions (Roth Conversions to Target 14% Incremental Average Tax, Social Security at 70), which increases the legacy supported by investments to $495,332. As delaying Social Security adds value to the plan, I proceed with this tax planning discussion by detailing the differences between the conventional wisdom strategy and a more tax-efficient strategy when both use age 70 for Social Security claiming. As can be seen, the topics described in this article can add significantly to the performance of a retirement plan.

Figure 1 shows the analysis when managing different incremental average tax rates paid on additional IRA disbursals used for spending or Roth conversions. Legacy peaks at an incremental average tax rate target of 14%, though legacy values are quite close for a range of tax targets from about 10% to 16%. With the 14% target, the legacy in today’s dollars is $495,332. The conventional wisdom tax strategy supported $379,192 of the legacy. These are the two strategies we investigate further.

In Figure 2, we start by showing the spending by account type over retirement in real dollars for the “conventional wisdom, Social Security at 70” strategy. Taxable assets are spent first. There is enough to cover the first four years of spending and part of the fifth year (age 66). Then, we shift to the tax-deferred account. Spending increases at first to account for the higher taxes with these distributions. It falls at age 70 as Social Security begins and falls at age 85 with the reduction of the spending goal. The tax-deferred account depletes at age 92, and then the tax-exempt Roth account covers the remainder of spending. These distributions are also a bit smaller, as taxes decrease when spending is sourced to the Roth account.

Next, Figure 3 shows spending by account type for the more tax-efficient strategy (Roth Conversions to Target 14% Incremental Average Tax Rate). Tax-deferred account distributions remain high through age 69. This is primarily driven through Roth conversions and covering spending needs. The Roth IRA distributions are negative in these years as inflows arrive from the conversions. I do not show those negative values to make the lines easier to see, but the amount of Roth conversions and the negative values reflect the inflows to the tax-exempt account. With Roth conversions, taxes will be higher, and this also leads to greater distributions from the taxable account to cover spending needs and taxes. The taxable account now depletes at age 65.

At age 65, retirement spending needs are sourced to the tax-deferred account, pushing the starting point for considering conversions to higher tax brackets. This makes it harder to engage in Roth conversions while keeping the incremental average tax rate on the additional distributions below 14%, so Roth conversions decline dramatically. Social Security begins at age 70, further reducing tax-deferred distributions and leading to tax-exempt distributions from the Roth to help manage taxes.

At age 73, the distributions enter a phase in which RMDs are taken from the tax-deferred account, raising the initial base of taxable income. There is no longer an opportunity to manage further distributions at a level below the tax target. The remainder of the spending goal is covered through distributions from the tax-exempt account. This continues for the remainder of retirement, with a drop in the spending goal at age 85. At age 95, there are still assets in the tax-deferred (legacy value is $131,433) and tax-exempt (legacy value is $363,899) accounts.

One may wonder why the tax-deferred distribution is higher at ages 70 to 72, compared to age 73 and later. This is a quirk of the incremental average tax rate methodology, as in the years before RMDs begin there is a longer runway for generating taxable income with a smaller tax impact to keep the incremental average tax rate lower for longer, allowing for greater total taxable income. Once RMDs begin, the starting point for incremental disbursals is higher, which causes the 14% average tax rate threshold to be reached more quickly. As will be seen later, this couple is impacted by the tax torpedo, and they cannot generate more taxable income beyond their RMDs without immediately exceeding their target rate.

Comparing the Tax Impacts

There are no Roth conversions with the conventional strategy. But Roth conversions play an important role with the more tax-efficient strategy, especially in the first four years when spending needs and taxes are covered by the taxable account. A small amount of Roth conversions continue until Social Security begins at age 70, and then these opportunities end as the Social Security tax torpedo will come into play.

For Roth conversions, the early retirement years consist of spending down taxable assets like in the conventional strategy, but also generating more taxable income by converting assets from the tax-deferred account into the Roth account while the extra taxes can be paid at a low enough average rate. The first three years of retirement witness Roth conversions of more than $150,000 per year, which can be done while keeping the average incremental tax rate below 14% as income pushes through the 0%, 10%, 12% and 22% tax brackets. In the first year, the Roth conversion is $151,220. This amount was determined because it generates $21,171 in tax, compared to $0 tax before Roth conversions begin. This is precisely an incremental average tax rate of 14% ($21,171 ÷ $151,220).

How the Tax Impact Was Determined

The taxes considered in this case study include the impact of ordinary income marginal tax rates, the impact on taxable Social Security, the impact on Medicare premiums in two years (estimated as a part of current-year taxes to determine the average tax rate), the impact of shifting preferential income into higher tax brackets and the impact of additional net investment income and Medicare surtaxes. The targeted incremental average tax rate providing the best financial outcome can then be determined.

To find a method that can be reasonably explained, the incremental average tax rate works well. This is a measure of the total change in taxes due as a percentage of the additional IRA disbursal or Roth conversion amount. It goes beyond the marginal tax increase of the last dollar of the conversion to look at the entire tax impact of the conversion. It is easier to compute because there are fewer potential target tax rates to test than with other approaches that aim to manage levels of adjusted gross income (AGI). It also naturally allows the income thresholds to adjust based on the tax situation in a straightforward manner to pick up nonlinearities in the tax code that impact taxes each year. The optimal strategy does not have to be described as multiphased with different income thresholds targeted at different points in retirement. Finally, it will be easier to use average tax rates in real-world applications as individuals can more easily target when the additional tax on a Roth conversion remains below the targeted incremental average rate threshold.

But this method is not perfect. First, for any individual case, there is still a need for some sort of software or projection to decide which incremental average tax rate should be targeted. Second, there could be more efficient methods than what I describe. The average incremental tax rate performs well in comparison to more sophisticated approaches, but I do not claim that it is the best. Tax-efficient distribution strategies are an area of active research and different software programs are being developed for both financial advisers and individual consumers.

For the conventional strategy, AGI is low during the first four years, as the only taxable income source is interest earned on the taxable assets. AGI increases dramatically from ages 66 to 91, as distributions from the tax-deferred account (treated as ordinary income) become the primary spending source. Social Security also helps to meet spending needs after age 70. Late in retirement, spending is covered through the tax-exempt account, and the only source of AGI is the taxable portion of Social Security.

Meanwhile, the more tax-efficient strategy keeps AGI higher by using Roth conversions until age 70 when Social Security benefits begin. At this point, the tax situation has been dramatically improved, and AGI remains lower for the remainder of retirement. Taxable income sources include smaller tax-deferred account distributions and a smaller percentage of taxable Social Security benefits. Since the tax-deferred account does not deplete, AGI is higher after age 92 since these assets are still available to support a portion of retirement spending.

Figure 4 shows the total federal income taxes paid for each retirement year. The conventional wisdom method keeps taxes at $0 for the first four years as the taxable account generates less interest than the amount of the standard deduction. Tax capacity is wasted, as income could still be generated at a 0% marginal tax rate. Taxes then increase once the taxable account depletes, and the Social Security benefit taxation and IRA distributions keep the tax bill consistently higher until the tax-deferred account depletes.

Taxes decrease at age 85 as the spending goal drops, and taxes fall to $0 at age 92 when the tax-deferred account depletes and retirement spending shifts to the tax-exempt account that does not impact AGI. At this point, the only taxable income is the taxable portion of Social Security, and this is less than the standard deduction.

Meanwhile, the tax-efficient strategy leads to a higher tax bill through age 69. Once Social Security and RMDs begin, the total taxes due are kept low for the remainder of the retirement horizon. Taxes have been front-loaded with this retirement strategy.

Figure 5 shows the amount of RMDs by age for the two strategies. As of 2023, RMDs begin at age 73. With the conventional wisdom, the tax-deferred account balance is much larger at this point, and it is spent more quickly, leading to higher RMDs through age 84, and then lower until the tax-deferred account depletes at age 92. With the tax-efficient strategy, the efforts to engage in Roth conversions have led to a lower and more consistent amount of RMDs throughout retirement. Part of what drives the 14% average tax rate to support the best outcomes is how it leads to RMDs that remain below the standard deduction, which also helps to reduce taxes on the Social Security benefit.

In this case study, the upfront taxes help to dramatically reduce the taxable amount of Social Security benefits received by the household. The conventional wisdom strategy leads to 85% of the Social Security benefits being taxed for most of the retirement horizon.

For the $52,200 of annual benefits received, 85% taxation means that $44,370 of these benefits are added to AGI. Only with the depletion of the tax-deferred account at age 92 does this percentage drop. At this point, because the thresholds for determining the taxable portion of Social Security do not adjust for inflation, even half of the Social Security benefit is large enough to ensure that a portion (around 15%) is taxable. The capacity to pay taxes at a 0% tax rate is again being wasted by not having enough taxable income to cover the standard deduction.

With the more tax-efficient approach, the taxable portion is about 54% at ages 70 to 72, and then it decreases to 30%. The taxable percentage then slowly increases as the formulas for determining Social Security benefit taxation are not indexed to inflation. This lower Social Security contribution to AGI along with less RMDs drives the tax savings.

Figure 6 shows the marginal tax rate paid on an additional dollar of income for the federal income tax brackets without including any additional nonlinearities like the Social Security tax torpedo. The conventional wisdom strategy does not take advantage of the lower tax rates available through 2026. It then settles into the 25% marginal tax bracket until age 85 when the reduction to the spending goal helps to support a reduced level of taxable income. The couple stays in the 15% tax bracket until the tax-deferred account depletes, at which point the tax rate falls to 0%.

Meanwhile, with Roth conversions, the marginal tax rate for the more efficient strategy is 22% through 2025 and then 25% until age 69. After this point, the marginal tax rate does not exceed 15% again and is even able to stay at the 10% level for ages 73 to 82.

Legacy Value of Investments for the Two Strategies

Finally, Figure 7 compares the legacy value of investment assets over time. This sums the remaining taxable assets, 75% of the remaining IRA (to account for the embedded income tax liability) and the remaining Roth assets. We know from before that the legacy is higher for the more efficient strategy at age 95. It turns out that the legacy is higher at all ages. This is a result of the assumption that any IRA assets left as an inheritance will go to adult children facing a 10-year window to take distributions and who will face a 25% marginal tax rate. Because the retired couple can immediately start to use Roth conversions and pay taxes at 22%, they are immediately improving the legacy value by a small amount that continues to grow throughout the entire retirement horizon.

Conclusion

Though retirees may be wary about unnecessarily generating more taxable income in the early retirement years, this is another example about how short-term sacrifice with retirement income planning can lead to long-term efficiencies.

The conventional spending strategy creates inefficiencies by wasting the ability to generate taxable income without paying tax and by unnecessarily generating too much taxable income in the middle retirement years. Though the couple could avoid paying taxes during the first four years of retirement, they are heading toward a bigger tax bill later.

The same problem also happens late in retirement as the tax-deferred account is spent too aggressively. Shifting income from the high-tax middle years of retirement to earlier and later years when lower marginal tax rates apply would have helped their financial situation in a meaningful way.

The incremental average tax rate strategy better smooths taxes and manages non-linearities to keep their overall taxes lower. Real value can be obtained by combining a delay in Social Security with an aggressive Roth conversion strategy in the early retirement years.

Strategies for Determining How Much You Can Spend in Retirement

Portfolio Strategies

Discussion

Hugh P from WA posted over 3 years ago:

I'm thrilled this example is close enough to my situation to be directly applicable. I want to review carefully to digest the assumptions, but the main message of using Roth to pay tax upfront for later savings is important. I recall a prior article that notes, in a stable environment where tax rate is even, Roth and Traditional approaches are equivalent percentage tax hit - either fewer dollars upfront on a smaller account (Roth) or let wealth increase and pay more dollars later (Traditional). As the article points out, there is a lot of opportunity for tax rates to change over time and create better position for Roth conversions. That is what I have been pursuing, acknowledging the personal psychological benefit of getting the tax bite out of the way. I would be depressed to approach the peak of the yellow line of Figure 5.

WILLIAM W from CA posted over 3 years ago:

One "tax" which early retirees who rely on the ACA for health insurance (before they reach age 65) also need to consider is the reduction in ACA subsidy as MAGI rises (e.g. from Roth conversions). There is also the potential of the return of the subsidy cliff (complete loss of subsidy) if changes first implemented with the American Rescue Plan and then extended with the Inflation Reduction Act are not extended past 2025 or made permanent.

RICHARD S from HI posted over 3 years ago:

Does anyone have a spreadsheet to help calculate, visualize the Figures?

WAYNE W from WI posted over 3 years ago:

I decided to take Social Security at age 62 and "give up" the "benefits" of waiting until later. My reasoning was as follows: 1) I had retired from all employment and the amount I received at age 62 was more than sufficient to cover all basic living expenses; 2) I could, in a tax-advantaged way, move assets from my seven-figure traditional IRA to my ROTH IRA, so as to reduce the impact of RMDs at age 73. 3) I am a dividend-growth investor and set a goal to have income from my IRA investments to exceed the RMD so that I would not be forced to sell any assets starting next year at age 73 to cover the RMD. 4) Our taxable brokerage accounts are relatively small when compared to our IRAs and ROTHs. Therefore, it is very easy to manage taxes from smaller withdrawals from the traditional IRA. 5) I trade covered call options and cash-covered puts. These provide additional income in all of the eight accounts my wife and I own. Income is the least of our problems. Social Security is never guaranteed. We had a friend who retired and started Social Security and died a couple of months later. Waiting did not work to his advantage.

P B from FL posted over 3 years ago:

The current tax rates will sunset after 12/31/2025 and will revert back to the 2017 rates unless Congress extends them. We have been retired since 2019 and each year have been taking IRA taxable distributions in cash and convert unneeded money to Roth IRA’s to stay in our current tax bracket. We both have pensions and I will start my social security payments at age 70. We keep our total income below the Medicare IRMA threshold to keep our health insurance premiums as low as possible. Even though our RMD’s won’t start for 5 or 6 years I have been projecting our annual taxable income with RMD’s after IRS Publication 590-B is updated and discuss it with my wife. This helps her understand the strategy about minimizing taxes we pay.

DONALD M from WA posted over 3 years ago:

You lost me at $30,000 per month of social security. How many other typo's are in this article? DM Washington

DAVE G from TX posted over 3 years ago:

Questions for the author Wade. Did you try not spending all the taxable account and saving it as a stepped up legacy generating no taxes? This is what I am doing here: https://seekingalpha.com/article/4606236-growth-no-dividends-one-year-later Created my own no dividend portfolio just for that purpose so it won't add taxes. Second, I know you know that converting Roth funds at 22% and 25% for a retirement that spends money at 14% or even 10% does not provide extra after-tax income, it actually provides less. Seems like you get away with a fast one by assuming the legacy will generate 25% tax, but to get there you had to spend more of your earned income. Finally, as you mention there are more tax efficient ways to spend the retirement money. Any plan that uses tax-deferred IRA funds to do conversions at 22-25% and then runs out of those same IRA funds in retirement, or spends Roth funds at 14%, has sent too much money to the IRS for taxes on the Roth funds.

J M from NJ posted over 3 years ago:

Richard S wrote: "Does anyone have a spreadsheet to help calculate, visualize the Figures?" I use the MS Excel based Pralana Retirement calculator to perform and model my own calculations. https://pralanaretirementcalculator.com I am fan of income smoothing as a means to smooth lifetime income taxes and maximize lifetime after tax income based on one's available assets and remaining life expectancy / retirement planning horizon. Wade's article illustrates the potential benefits of income smoothing. I am aware of three other affordable retirement calculators that can estimate lifetime taxes and perform income smoothing calculations. https://i-orp.com It's free to use. https://maxifiplanner.com https://www.newretirement.com

ANTHONY A from NC posted over 3 years ago:

As someone noted earlier, managing the ACA subsidy is key for the period between retirement and medicare. It's a pain to do and the rules are complex and changing, but it's worth $20,000+ a year for a couple. After Medicare, the Roth conversions until RMDs hit begin to make sense for the low-income period between 65 and 73.

JOHN S from MA posted over 3 years ago:

I'd like to apply these concepts to my own personal situation, since I have only six more years before RMDs must begin. A wild card is what exactly will happen in 2026, as Congress may or may not take some action to moderate the impact of the Internal Revenue Code fully reverting to the 2017 version of the Code. Does anyone have an authoritative view from the IRS (or an educated guess from their tax accountant) on whether the 2026 tax tables will literally go back to the 2017 tax tables in all material respects, including exemption values, AMT exemption amounts, etc? Or will they be at least inflation-adjusted for the inflation occurring from 2018 - 2025, under current law, assuming no action by Congress? We can each make our own guesstimates of what the inflation adjustments will be for the 2024 and 2025 tax years, but I'd like to know whether all the cumulative inflation adjustments past and future will simply be ignored in 2026 as we jump back to 2017. under current law.

LYNNE A from CT posted over 3 years ago:

And, Wade, how would adding QLAC’s into the mix complicate/change the conclusions?

BRIAN H from TX posted over 3 years ago:

Wade, the strategy of delaying Social Security benefits and making use of Roth IRA conversions early in retirement depends on the assumed low reinvestment rate of 4.29%. If it is assumed the reinvestment is higher, 8.0%, the optimal strategy would be quite different. I think you should have made clearer that results are very sensitive to the reinvestment rate assumed.

BRIAN H from TX posted over 3 years ago:

Wade, you state "... goal of maximizing aftertax legacy values is not necessarily the same as minimizing taxes..". I agree if you are referring to the sum of taxes. But, doesn't minimizing the present value of taxes result in the maximum aftertax legacy value?

ROBERT A from NC posted over 3 years ago:

Wow! This is way too complicated for me. My plan is simple: stay 100% invested in equities and leave more than I now have to my children by staying well below the "magic" 4% spending level. The idea of settling for a 4.29% return on the money I've scrimped and saved for all my life is frightening--and practically offensive! I guess I'll just take SS when I'm at full retirement age (67). There's no way to be certain about what age will maximize it anyway.

JORDON W from CA posted over 3 years ago:

I’m not sure I understand the 14% incremental average tax rate. Let’s say I am already 70 and still in the 32% incremental tax rate (with pension, SS, etc). Does it make sense to convert IRA money to Roth if it takes my rate to the maximum incremental rate (which is still less than a 14% increase) to maximize the remainder to my beneficiaries?

John H from FL posted over 3 years ago:

An additional reason to convert an IRA to a Roth is that when one of the spouses dies the tax pictures changes from MFJ to Single. As a result the tax rates increase while the RMD would stay the same. The surviving spouse has a similar income but their tax rate is now higher. Reducing the actual income because of the increased tax burden. In addition their Medicare premiums might increase because of the status change to Single.

STEVEN H from CA posted over 3 years ago:

An excellent article on a subject that applies to everyone. The article presents a thorough and useful analysis. Thank you Wade Pfau and AAII. I appreciate the article on the important subject of how to manage the long-accumulated investments that AAII spends so much of its efforts educating it's members on how to accumulate. To my frustration, AAII does not make enough effort to also educate on how to plan for the best management and use of the investments that members accumulate. I really hope and strongly suggest/request that AAII and Wade Pfau pursue a follow-up article that (1) addresses how Wade Pfau's analysis would change for a single (non-married) person going into retirement since at least half of us are single when we begin retirement, and (2) addresses some of the other very good points/questions other readers have also asked in their comments. Thank you.

STEVEN H from CA posted over 3 years ago:

Unfortunately the $30,000 of social security "per month" error will undoubtedly confuse many readers.

STEPHEN S from MD posted over 3 years ago:

How is the Incremental Average Tax Rate actually calculated? Is it a difference between marginal tax rates, or some other percentage?

Don P from USA posted over 3 years ago:

At The rate Congress makes changes in Fiscal Policy , we will have to wait till the 11th hour ending 2025 to determine our taxe rates from 2026 and beyond: case in point this past December .

KEVIN V from NC posted over 3 years ago:

I appreciate the article Wade. I am 8 years from drawing SS at 70 but taking all my distributions from regular 401k (TSP). It seems to me that minimizing the RMDs is the best way to control future taxes. I'll likely complete my Roth conversions in the next year or two - I do not want or need to convert it all. But getting the balance down is sure to help when one of us dies 10 years or so before the other.

JAMES M from MT posted over 2 years ago:

Wonderful article going by the number of comments above. As some have said there is a lot to digest here. A few of us believe the couple used as an example were chosen in ideal conditions. Situations not so near ideal should be mentioned. Roth conversion is the current popular method for most of us. I’m doing it to the point where it hurts my household spending. I’m starting to think there may be some value for research about when to stop Roth conversion. We’re good at hedging our bets, maybe a little caution here is advised. No one hits the bullseye every time. There must be some statistical variation. Life confounding factors include death, divorce, and illness, all factors which apply to benefactors as well as beneficiaries. What if my son gives up on life to move away and become a monk where my bequest in Roth funds is not necessary because he will be in the 0% bracket? Not to mention the various situations we find ourselves in currently. Experts focus on the numbers because that’s where they were trained. The article is a great starting point on a subject where we see varied life situations as confounding to the point of unknown unknowns. What happens to those of us who follow the Roth conversion advice? Are we better off vs. enjoying the fruits of our labor? Observational studies might help. Terminal value or current income? Ask your beneficiaries. I’m probably missing something here. Again this author has gone further into great detail than any other author to my way of thinking.

THOMAS S from MN posted over 2 years ago:

Unfortunately Mr. Plau did not incorporate QCDs into his tax strategy. Qualified Charitable Distributions directly reduce the taxable portion of RMDs. This reduces MAGI so both taxes and ACA/Medicare premiums are also reduced. If one has earmarked gifts to charity from his/her estate, making those donations while still alive allows one to make gifts that are more meaningful to you and reduces present-day taxes, often resulting in the ability to make even larger charitable gifts.

David B from CA posted over 2 years ago:

Dr Pfau is a revered specialist in this area. I don't think it was intended to be the end all but rather to point out certain aspects of retirement spending we might not have considered. I would suggest you read a few of his books and you will know more than necessary. Stay on top of the constant tax/policy changes however and make sure you get his most current work if considering a reverse mortgage.

EDWARD M from PA posted almost 2 years ago:

" For Social Security, I simplified to make them a one-earner couple. The primary insurance amount is $30,000 per year for the worker." Perhaps a re-read of a detailed article is in order for some of us? $30,000 /yr, not $30,000/month? I know I will need to reread and study to truly understand the author's message!

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Four Tax Strategies for Retirees

The Four Strategies

Comparing the Tax Impacts

How the Tax Impact Was Determined

Legacy Value of Investments for the Two Strategies

Conclusion

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