Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success (The Retirement Researcher Guide Series)

by Wade Pfau

Next, in Exhibit 10.21 we allow for strategic Roth conversions as part of tax-bracket management. The optimal AGI target is $60,000 again, and this increases portfolio longevity by another 0.72 years over the previous strategy. Roth conversion strategies tend to support the same or better outcomes than simple bracket management. For Roth conversions, the early retirement years consist of spending down taxable assets like in the conventional strategy, but also generating more taxable income by converting assets from the tax-deferred account into the Roth account to cover the target. The first four years of retirement witness Roth conversions of more than $50,000 per year. Roth conversions continue until the taxable portfolio depletes. The additional taxes on the conversions are also funded by the taxable account, which depletes it more rapidly. At age