Retirement Financial Planing

[alldodge]

I'm not sure converting IRA to Roth at a late stage in life is all that worthwhile, given the one-time tax hit. Makes good sense earlier on since the money has plenty of time to grow.

Like you @alldodge I am 70 years young, as are a few other regulars on the forums.

About 10 years ago, I started converting a growth/value oriented portfolio to more of a dividend earning portfolio. Only a small portion of my is in an IRA, so when I have to start withdrawing it in a few years, I will take that money and put it in something that earns decent dividends, and just keep moving things it that direction.

I had a 'magic number' in mind when I would be able to retire. When our overall savings hit that number, I just needed one bad day at the office and that would do it. . . . and here I am.

I was planning to do about the same but found out I didn't need to be so careful. I still have my IRA in Vanguard money market so it has lost a lot if it moved directly back into VOO with S&P jumping up. Still believe the the S&P will take a hard fall because it's being driven by greed, time will tell

I have pretty much a solid plan just hoping it works out. Last thing I want to happen is be moved into the 50+% tax bracket and only way out is to dump almost everything from IRA to Roth IRA, take the tax hit for a year or 2 until we get back on track

 

[tpenfield]

Is there a 50% tax bracket? Seems like it is more like 37% . . but add any state tax and you are close to 50%.

 

[flashback]

Most good financial advisers are only good for themselves.

 

[bruceb58]

Most good financial advisers are only good for themselves.

That's why my financial advisor is free which I get for free because I have half of my money invested at Fidelity.

 

[bruceb58]

I have pretty much a solid plan just hoping it works out. Last thing I want to happen is be moved into the 50+% tax bracket and only way out is to dump almost everything from IRA to Roth IRA, take the tax hit for a year or 2 until we get back on track

Any reason you didn't start the IRA to Roth conversions when you were younger? I started when I retired when I turned 59....now 67.

Put a few of your scenarios into an AI program and let it run the numbers. I personally like Gemini. I load up my tax returns into it and have found issues that I later corrected.

 

[alldodge]

Is there a 50% tax bracket? Seems like it is more like 37% . . but add any state tax and you are close to 50%.

It works out around 50% when you take into account, Medicare increase x 2.

Any reason you didn't start the IRA to Roth conversions when you were younger? I started when I retired when I turned 59....now 67.

Never gave it much thought because we don't need our IRA's. I'll be moving around 190K each year for the next 4 years into Roth, this will keep us in the 24% bracket

 

[tpenfield]

Not a thing for once you retire (but maybe) . . . I never seemed to have any money until I became debt-free.

Probably a good piece of advice for financial planning . . . (YMMV)

 

[alldodge]

Not a thing for once you retire (but maybe) . . . I never seemed to have any money until I became debt-free.

Probably a good piece of advice for financial planning . . . (YMMV)

Totally agree, been debt free for about 18 years now

We put everything on cash back credit cards and pay off every month. CC Companies pay use now to use their cards

 

[nola mike]

So as much as I hate taxes, I figure that if I'm retired and trying to avoid the 37% tax bracket, I'm doing alright. That's more money than I can spend territory, so if I screw up and end up there...worse things can happen.

 

[tpenfield]

I might actually like being at or close to the 37% tax bracket . . .

37% Bracket Income Threshold $768,700. . . if you are just below it . . .

Tax on $768,699 of income" The federal income tax on $768,699 of taxable income for a married couple filing jointly in 2026 is approximately $206,583, resulting in an effective tax rate of about 26.9%. ( you keep $562,116 . . . less about 48K in (my state) tax. . . . $514,000 ) . . . I might be OK with that.

 

[alldodge]

2026 Medicare monthly premium each filing joint
$218,000 or less $202.90 or $4,869.60 yr
$218,001 to 274,000 = $284.10 or $6,818.40 yr
$274,001 to 342,000 = $405.80 or $9,739.20 yr

https://www.medicare.gov/publications/11579-medicare-costs.pdf

 

[nola mike]

I might actually like being at or close to the 37% tax bracket . . .

37% Bracket Income Threshold $768,700. . . if you are just below it . . .

Tax on $768,699 of income" The federal income tax on $768,699 of taxable income for a married couple filing jointly in 2026 is approximately $206,583, resulting in an effective tax rate of about 26.9%. ( you keep $562,116 . . . less about 48K in (my state) tax. . . . $514,000 ) . . . I might be OK with that.

Exactly. And don't forget your standard deduction (at least), which is a gross income of $800k.

 

[redneck joe]

we will be well below the $109k. They have a COLA on this number as well?

 

[tpenfield]

This being a boating website/forum, I think we need to factor in boats and boating into our retirement planning. Else, what would be the point of retiring???

The thing is, once you get close to retirement age, there is not much time/room for planning . . . what you see is what you got.

 

[bruceb58]

Exactly. And don't forget your standard deduction (at least), which is a gross income of $800k.

What does the standard deduction have to do with anything?

 

[tpenfield]

FWIW - I found this video fairly interesting as it discusses the subtle differences in what it takes to climb the 'wealth ladder' into retirement.

 

[alldodge]

That is a great vid and would be great to show in high school junior and senior

 

[nola mike]

What does the standard deduction have to do with anything?

Your gross income can be higher before you hit the highest tax bracket

 

[Pmt133]

I'm looking to do a partial retirement around 50.... Still work but either go to part time or consulting. Depending on what I am doing at that point, maybe I stick around longer or not where I currently am. The men in my family don't typically make it much past their 60s so I'm trying to enjoy while also accepting the fact I'm already past halfway to the finish. Chances are I have a pension that I barely use any of. Or I use a lot of it and just lose like 40% of it's value because I touch it before 65.

Close friend is a Fidelity guy. Been taking care of that end with him. Pretty good shape with roths as well as some other investments we scattered around. Not too many people I trust with that stuff but he is one of them.

Whole thread has been a good read so far gents, appreciate it.

 

[tpenfield]

One thing that I tell young people, family & friends, etc about retirement planning, which largely amounts to savings, is that you really want to put away about 12-15% of your income from day 1 for retirement.

Lots of folks don't put away enough or for long enough, and the stats on what the median retirement savings shows that. I believe it the median amount is around $200K, which does not amount to much in terms of retirement resources.