Am I too old for Roth conversions? I’m 84 and my wife is 77. We have $8 million saved.
“We are reluctant to pay a financial adviser 2% of assets — roughly $160,000 per year.”
The couple's concern about fees is understandable, especially given their significant savings. Paying 2% of assets annually can be a substantial expense, eating into their returns over time. For a high-net-worth individual, it's essential to weigh the benefits of professional advice against the costs. In this case, the couple may be looking for alternative solutions or guidance to optimize their financial situation.
Roth conversions can be a valuable strategy for managing taxes in retirement, but they do come with considerations, such as income tax implications and required minimum distributions (RMDs). At 84 and 77, the couple may be taking RMDs, which could impact their decision on whether to convert traditional IRA assets to a Roth IRA. Converting could potentially reduce their tax burden in the long run, but it's crucial to assess their individual circumstances, including their tax bracket, income needs, and overall financial goals.
As the couple navigates this decision, they should keep an eye on tax law changes, as these can impact the attractiveness of Roth conversions. Additionally, they may want to explore working with a fee-only adviser or a robo-advisor, which could provide cost-effective guidance. It's also essential to consider the potential benefits of Roth conversions in the context of their broader estate plan and to monitor how their financial situation evolves over time.
Originally reported by marketwatch.com. FundNews adds analysis for finance & markets readers.