re: 1st 90 Days Retired - portfolio allocation question

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There’s also a compounding angle: keeping money in a tax-deferred account means a larger pre-tax balance stays invested, so you’re effectively earning returns on the IRS’s share as well.

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And if I expect my future rates to be similar, there’s no real arbitrage to capture.
At that point, all I’d be doing is prepaying taxes and reducing the amount that stays invested, which gives up the benefit of compounding on a larger pre-tax balance

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I think you're missing the commutative property here. If tax rate is same, the compounding doesnt make a difference if you pay tax up front or after compounding. You are multiplying same factors just in a different order.
Even in same future bracket seniors face IRMAA and tax on SS income. In my case, effective taxes will almost certainly rise due to IRMAA, widow penalty, tax on SS income. That's before accounting for the uncertainty of future tax rate policy. I assign some value to locking in known tax rates. Then there is the likelihood I may inherit additional tax differed assets with a 10 yr required distribution window. Also as OP mentioned, it may be advantageous to pay tax now so heirs dont face higher rates on inherited funds during theor.high earning years.
Please show some cases for not doing conversions in early retirement or references other than other boards to peruse.

Only way I see Roth conversion being suboptimal for me is if I pass early (well before wife hits IRMAA) and my widow could convert or distribute for many years in lower bracket because she will lose my pension income.

My dilema.is determining best timing and size of annual conversions. On one hand want to knock.it out quickly to minimize years my dividends and LTCG are subject to 15% tax. But is it worth it to trigger 24% bracket instead of 22% and possibly 3.8% NIIT? On.otherhand, I could go slow and optimize for tax rate but risk not getting enough converted in time to matter.

This is why I need a good Roth optimizer tool and not just follow a.dogmatic approach. (Often based on flawed understanding of the math)

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This is why I need a good Roth optimizer tool and not just follow a.dogmatic approach. (Often based on flawed understanding of the math)

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While I did not use their plan, Q3 Advisors are supposedly Roth Conversion experts. BTW, they agreed that unless my situation changed that I should not convert. Their 'guarantee' is kind of silly, though, because it's pretty easy to show $500K in tax savings when you take into account all of the factors if you have a decent nest egg.

Did you consult w Q3 and if so what was your impression? Would you recommend? $11k seems steep but I'd like someone to QC my strategy before I commit nd make costly mistakes DIY.

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So without a clear marginal tax advantage, I don’t see a strong case for converting. I am aware that I am an edge case.

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Suspect you are but make sure whole picture is in focus. Marginal tax advantage and:

IRMAA impact (if high RMD pushes your MAGI / high tax brackets).

If you have wealth transfer plan, you may be transferring (tax deferred) at heirs highest tax brackets of their career.

I’m sure there are other considerations and these may not matter to your situation.

My key take away is whole picture > RMD reduction (marginal tax only) focus so to speak. In my case, RMD reduction is important part of whole picture.

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Helping IRA Millionaires save $1 million (or more) in unnecessary taxes

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Compound 1% AUM fee of your portfolio for 20yrs.

Should be a surgeon general warning label requirement! Kidding.

I did the modeling with Boldin. I'm a former engineer and am used to doing a lot of financial modeling. Of course, as things change I will re-evaluate. I have also engaged fee-only financial advisors to use as sounding boards. Unfortunately, it's difficult to find good ones.

I also subscribe to the "Die With Zero" attitude meaning that my kids will inherit significant amounts before I die. A $10K gift would have made a world of difference to me in my 20s or 30s, so I am going to help my kids when they're looking to do something specific (e.g., buy a house, buy a car, etc.).

You can also gift your kids a significant amount ($19K per year, per parent) while you're still alive. If they're working, give them at least enough to fully fund a Roth IRA or even more to "save up" for those larger purchases. I would only give it with the understanding that it's not to increase their lifestyle and if I found they broke that trust then I'd re-evaluate my giving. They'll be so far ahead of the curve, they won't begrudge my not converting my IRA to Roth.

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I'm 53

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I'm not a boomer

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Got some news for you chief

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The truth is you can also have wealth. What it takes is widely known. The problem is few people have the discipline to do it.

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The dollar has lost 90% of its value in millenials working lives, so far


Who knows how bad it will be by the time we’re boomer age

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The dollar has lost 90% of its value in millenials working lives, so far

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Question: Do you think that just affects millenials?

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Boomer means that you’re over 40

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If you don't know what generations are, sure that can be a definition. Of course I was born almost three decades after World War 2 ended, but don't let that distinction stop you.