I've heard it said here that when doing Roth conversions it's a good idea to leave some amount of money in the tIRA for two reasons: (1) to fill up the lower income tax brackets each year, and (2) to cover large medical expenses, such as a nursing home, in your final years. The first reason doesn't apply to me and my wife because we have pensions. I'm trying to figure out what would be a good target amount and target age to reach that amount for the medical expenses idea. Please give me your opinions.
For example, I'm thinking maybe $400,000 at age 85 might be about right. It might be a bit low, but hopefully both me and my wife won't have large expenses. If we guess wrong, we will have a lot of money in our Roths and taxable anyway. Then, since I'm only 58 right now, I have 28 years until I get to 85. So, I could use a 2% inflation rate to figure out that $400,000 today will be something like $700,000 when I get to 85. When I do my spreadsheet calculations of how much Roth conversions to do between 65 and 75, I would target to end up with $700,000 in the tIRA when I get to 85.
Please let me know what you think of this approach, especially on the target residual amount and target age. I know there's no perfect answer here. I'm just trying to come up with a reasonable approach.
For example, I'm thinking maybe $400,000 at age 85 might be about right. It might be a bit low, but hopefully both me and my wife won't have large expenses. If we guess wrong, we will have a lot of money in our Roths and taxable anyway. Then, since I'm only 58 right now, I have 28 years until I get to 85. So, I could use a 2% inflation rate to figure out that $400,000 today will be something like $700,000 when I get to 85. When I do my spreadsheet calculations of how much Roth conversions to do between 65 and 75, I would target to end up with $700,000 in the tIRA when I get to 85.
Please let me know what you think of this approach, especially on the target residual amount and target age. I know there's no perfect answer here. I'm just trying to come up with a reasonable approach.
Statistics: Posted by stuper1 — Thu Feb 08, 2024 7:23 pm — Replies 3 — Views 481