Quote:
Originally Posted by Maker
Listening to people in retirement, and dealing with taxes, RMDs, IRMMA penalties, etc...
I have never heard anyone say they regret having their money in Roth.
I have heard it far too often they regret not funding Roth more, instead of their 401k.
If you backdoor rollover to Roth, remember the principal is available tax free right away. Any gains it makes are taxable unless 5 years passes.
A great strategy if you do rollovers in different years is to have separate accounts per year. Do not co-mingle funds from one year with another year. That can become a tax nightmare.
Also, you should take social security at 62. Even if you don't need it. Put that money into any interest account and let it grow. Yes, it is a lower amount per month than waiting... but...
Now at 67, you can withdraw a tiny amount every month to bump up that smaller SS amount to what it would have been if you had delayed taking SS. The breakeven point is late 80's at 0% interest for the investment. You are always ahead with just a couple percent interest. And if you pass away before breakeven, your family has all that money.
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Your advice for taking social security may not make sense.
First of all if the beneficiary of the social security earns more than $24,800 there is a giveback of $1 of every $2 over $24,800. Their is no limit when you reach full retirement age (66 and 10 months if you were born before 1960, 67 years if you were born in 1960 or later.)
Second up to 85% of the the social security received will be taxed at your highest tax bracket.
Third- there is a permanent reduction in social security. Claiming at 62 gives you about 56.5% of what you would get at age 70.
Fourth - the taxable portion of your social security may affect the IRMMA calculation when you start medicare premiums at age 65.
If you expect a long longevity taking at age 62 will cost you significant money. Also keep in mind COLA adjustments are based upon your social security.
FIfth - this will affect spousal benefits - a situation wherein the spouse can draw a portion of the other's benefits without affecting their rights to the full social security they would receive at age 70.
I usually advise my clients - unless they have medical conditions affecting their longevity - to wait until age 70.
It's not a one size fits all - be aware of the ramifications.