re: Roth Conversions: Breakeven Tax Rate (BETR)

quote:

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But saying frick it I'll just pick a random percentage is probably far from optimal.

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I'm going to have to disagree with you on that. I think if you do the basic math on the typical 401K investor who maybe only does the max that the employer will match, a typical 3:1 ratio between deferred and Roth is probably within a small percentage of what you'd arrive at after many hours of calculations. Note that I said "typical". This is the typical person earning typical wages using the typical 4% rule and typical assumptions about growth.

Other situations would vary depending on how far away or how close retirement is, and what your situation is, how much you were investing, etc, but the truth is that no recommendation is going to match what is ideal in the future, it just lays a foundation for you to build on.

Most people don't think about this as much as we do and don't want to.