Thanks very much for the thoughts. To answer you:With a marginal tax rate of 32%, doing Roth conversions of all tax deferred balances now and making Roth (rather than traditional) retirement contributions doesn’t seem optimal.
Doing mega backdoor Roths to move savings from Taxable to Roth makes sense.
Will you/your spouse receive SS benefits? Or are your pensions the only source of retirement income?
Do you and spouse have long-term care insurance?
Your 10% ROR planning assumption is aggressive. Your current portfolio + $138k savings /yr will probably grow to a portfolio of $2.0-$2.5 million invested in at least 60% equity in 10 years. Consider:
(1) do you have adequate disability insurance? As the sole breadwinner, your plan is dependent on you being able to work until you reach the desired #.
(2) apply now for 20-30 year level-premium term life as your current policy expires at age 50. If you die before age 65, this will allow your spouse as a surviving spouse to delay withdrawing from the portfolio until their 60s as the portfolio needs to last until age 100 and pass wealth on)
per your planning assumptions. It also helps if spouse’s pension benefits are terminated unexpectedly or spouse has significant uninsured care costs.
- Why doesn’t Roth conversions right now and roth 401k seem optimal? If I survive then I won’t need my savings and RMDs will bite me. Sure I may be in a 22/24 bracket later but then i’d also have a decade+ of growth to convert and pay taxes on.
- Agree about mega backdoor max…if i’m paying taxes anyways might as well grow and withdraw earnings tax free!
- Yes we’ll receive SS (although spouse will be half of mine)
- We don’t currently have LTCI. I’ll have to read up more on this and when the right time to purchase is
- Yes I have full replacement short and long term disability
- I’m not sure i’m eligible for best rate term anymore, hence my thought of using my guaranteed conversions if required later.
Statistics: Posted by taxesarecool — Fri Nov 29, 2024 8:14 am — Replies 6 — Views 444