How to Take Advantage of the Retirement Income Valley for Roth Conversions

Wondering when you should start thinking about a Roth conversion? That’s exactly what David McKnight dives into in this episode of The Power of Zero Show.

The retirement valley is that dip in taxable income that happens after you retire but before RMDs kick in – at age 73 or 75, depending on your birth year.

David walks through an example: you’ve got $2 million in your IRA and want to convert all of it to Roth.

If you take action during that valley, you can convert more while staying in the 24% tax bracket the whole time.

Not taking action now? Think of 2035 as the year tax rates are set to jump!

Why? Because interest on unfunded promises like Social Security, Medicare, and Medicaid has to be paid somehow.

Intrigued by the idea of a Roth conversion? Just make sure you move your money slowly enough to avoid jumping into a painful tax bracket.

A Roth conversion helps protect you from tax rate risk – the chance that future taxes will be much higher than today’s.

Worried about a financial collapse? A recent Penn Wharton study points to 2040 as a year to watch.

Even raising taxes or cutting spending may not be enough to stop what’s coming…

David says 2035 will be a turning point.

He predicts tax rates then could look like they did in the 1960s, when the top rate hit a jaw-dropping 89%.

There are two big reasons to take advantage of the retirement income valley while you can.

David shares two smart strategies to help you boost your tax-free retirement plan, and make your savings last longer.

 

 

Mentioned in this episode:

David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free video series)

@mcknightandco on Twitter 

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com

Penn Wharton