I'm 60 With $2 Million and a Pension... Should I Do Roth Conversions?

I know we have a lot of people watching this channel who are typically in their 50s and 60s, and most of the people watching have between one to 10 million saved is what we typically see.

And so we see this type of person pretty frequently who reaches out to schedule with us, who's his 60 year old with 2 million, And maybe they're a little less than 2 million, a little higher than 2 million.

Maybe they're a little older than 60, a little less than 60.

But we're specifically going to talk about this particular age and this particular amount as I talk through this case study today to help you get a better grasp of this Roth conversion strategy idea and to make sure you're planning the right way with your retirement.

Now,

the first

question that I have,

who should do a Roth conversion? Should everyone do a Roth conversion? And this is something that is a very hot topic that many people will say that everyone should do it.

It's such a great opportunity, tax-free growth, let's do it.

I argue that.

I'm on the side that I don't think that everyone should do a Roth conversion.

I actually think that most people should not do a Roth conversion.

And the reason why is because most Americans, 80% of them will pay little to no income tax federally in retirement.

And so if that is the case, why would we pay taxes now when we may not have to pay taxes in the future? And that's why they may be better off not doing anything and just waiting till that time comes to pay their taxes or maybe be under the standard deduction where they don't have to pay taxes.

But that person here today who's 60 years old with $2 million in their retirement savings and their pension amount, they may never be in a lower tax bracket.

They're not gonna be part of that 80% who doesn't pay taxes is what we would typically see.

They're oftentimes going to be in the 22% or 24% tax bracket ranges there.

They're going to have their Social Security be fully taxable, which means 85% of it's going to be counted as income.

Their pension's fully taxable.

And then we know they're going to take out investment withdrawals at some point in their retirement.

And even if they don't choose to take out investment withdrawals, we know when they get to age 73 or 75, the government's going to force them to take out investment withdrawals due to what's called the required minimum distribution.

So this is something we want to get ahead of and start planning now, knowing that that three-legged stool of income, RMDs with a pension and Social Security, that could lead them to be in a much higher tax break in the future and lead to taxes being paid at a much higher amount at that point.

as well.

So there's certainly going to be a great opportunity to look at Roth conversions for this specific person.

And as I say it with this specific person, Roth conversions nearly always make sense.