Let’s see what happens when Karen takes Social Securithy at 62 AND starts converting her IRA to Roths too shall we?
No surprise at what we’re going to find.
================================
Get the PDF version of my Tax Bomb book for free follow this link.
Be on the lookout for my 4th book coming out soon, YOU CAN RETIRE ON SOCIAL SECURITY!
If you like what you see, a thumbs up helps A LOT. It tells YouTube that people are engaged and so the Youtube algorithm will show the video to others who may be interested in the content. So, give me a thumbs up, please!
Don’t forget to SUBSCRIBE by clicking here:
My Amazon Product page:
Anything you buy there Amazon pays me a commission. Much appreciated!
If you received value from this video and/or channel, and want to say thanks, feel free to send a donation via Paypal. I’m not too proud to ask!
Contact me: Josh@heritagewealthplanning.com
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
State by State Tax Guide For Retirees:
GET ALL MY LATEST BLOGPOSTS:
PODCAST:
LET’S SOCIALIZE!
Facebook:
Linkedin:
Quora:
My SubscribeStar Page:
…(read more)
LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Karen Takes Social Security at 62 AND Does $50k Annual Roth Conversions
When it comes to retirement planning, there are various strategies one can employ to maximize their savings and ensure a comfortable future. One such strategy is utilizing Social Security benefits and Roth conversions. In this article, we will explore how Karen, at the age of 62, took her Social Security benefits while also engaging in $50,000 annual Roth conversions.
Taking Social Security benefits at the age of 62 is an option that many retirees consider. At this age, individuals become eligible to receive reduced benefits, typically around 70% of their full retirement age benefit. While opting for early Social Security benefits may result in lower monthly payments, it offers retirees the advantage of receiving funds earlier and potentially enjoying their retirement years to the fullest.
In Karen’s case, by taking Social Security at 62, she chooses to receive a reduced amount each month. However, she plans to supplement her retirement income by employing another strategy called Roth conversions. Roth conversions involve moving funds from a traditional pre-tax retirement account, such as a 401(k) or IRA, into a Roth IRA. The amount converted is subject to income tax, but once in the Roth IRA, the funds can grow tax-free and be withdrawn tax-free in the future.
Karen decides to convert $50,000 annually from her traditional IRA into a Roth IRA. This conversion amount is carefully chosen to ensure that it falls within a tax bracket she is comfortable with. By converting gradually over several years, she avoids a significant increase in taxable income, potentially reducing the amount of Social Security benefits that become taxable.
One significant benefit of Roth conversions is the potential to reduce taxes both in the present and in the future. Converting funds earlier can help retirees mitigate their required minimum distributions (RMDs) once they reach the age of 72. Traditional IRAs are subject to RMDs, which require individuals to withdraw a certain percentage each year, adding to their taxable income. By converting a portion of the funds into a Roth IRA early on, Karen can potentially lower her future RMDs and reduce her overall tax burden during retirement.
Another advantage of Roth conversions is the ability to leave tax-free income to beneficiaries. Traditional IRAs and 401(k)s are taxable to beneficiaries, potentially diminishing the value of the inheritance. Roth IRAs, on the other hand, can be passed on tax-free, allowing Karen to leave a tax-efficient legacy for her loved ones.
Of course, it’s important to consult with a financial advisor or tax professional when considering any retirement strategy. Each individual’s financial circumstances are unique, and it’s crucial to evaluate the pros and cons of different approaches to determine the best course of action.
In conclusion, Karen’s decision to take Social Security benefits at 62 while engaging in $50,000 annual Roth conversions is a strategic move to maximize her retirement savings. By taking advantage of the flexibility offered by Social Security and the tax advantages of Roth conversions, Karen aims to minimize her future tax liabilities and create a tax-efficient legacy. As always, it is essential to seek professional guidance when making important retirement decisions to ensure a secure and comfortable future.
Josh why is the Net Flow a negative number each year?
I totally agree ! My accountant doesn’t for some reason. But with the tax rates the lowest they have been in years thanks to Trump I plan on doing the same Roth conversion yearly. You have to pay sooner or later anyway. Low tax rate and future gains are tax free. Makes sense to me,
Not many people are stuck with the ACA.
Josh, I mentioned this on an earlier video but how can you not account for the negative Net Flows?? That money needs to come form somewhere and assigned to an account. How can all of Karen's IRA be distributed to the Roth when some of it will be needed to cover her expenses? There are 9 years at the start of her retirement that are not accounted for that need Planned Distributions. Are there not?
Won't Karen lose ~ $12,000.00 per year ACA subsidy until she reaches 65, because by taking 50K IRA distributions she will NOT qualify for the ACA credits?