Roth Conversions v. Subsidies | How To Prioritize When Retiring Before Age 65
Prioritizing Roth Conversions v. Healthcare Subsidies can be the difference of hundreds of thousands of dollars.
Here's a sample of how I viewed this for a couple of clients of mine who:
Case Study Details:
John and Jane are 62, respectively, and seeking retirement guidance after 35+. years of work!
No children. No desire to leave significant assets upon their passing.
They had diligently saved, but their initial plan was to work until 65, aiming for a 100% probability of success.
They want to optimize their tax situation and thought about trying to keep income low in order to qualify for healthcare subsidies.
They then found out about RMDs (Required Minimum Distributions).
Their retirement goals were as follows:
➡ $6,000 per month for core living expenses.
➡ An additional $10,000 per year for travel, but only for about ten years.
➡ All of this income needed to be after tax.
No pension.
Optimizing Retirement for a Fulfilling Life
We proposed a Roth Conversion to help them optimize their tax planning situation across their lifetime, not solely in a given year.
The crucial takeaway from this case is that retirement planning is not black and white. Keeping income low to qualify for subsidies may be best for one whereas Roth Conversions may be best for another.
Timestamps:
00:00 - Introduction to Roth Conversions v. Subsidy Planning
00:20 - Comments For Today's Video
1:25 - REAL Client Case
3:11 - Wages
6:24 - Premium Tax Credits
10:15 - Subsidy Planning OR Roth Conversions
13:20 - Roth Conversion Planning
14:27 - RMD Planning
18:54 - Please Leave Your Comments For What You Want NEXT!
20:17 - When Do You No Longer Need To Work?
Subsidy Calculator: https://www.kff.org/interactive/subsidy-calculator/
Ari Taublieb, MBA is the Vice President of Root Financial Partners and a Lead Financial Planner (Fiduciary).
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