Yeah from 60 to 65 Health Insurance will play a role in us not retiring. We will just have to see how things work out. I am glad we have this non-retirement bucket to pull from. Just gives us flexibility.
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For married folk, there is a 99% chance that one spouse will survive the other. (just an estimate, and its probably low – simultaneous deaths are rare)
And therefore, there is a ~99% chance that the surviving spouse will be in a much, much higher tax bracket when they have to file Single the year after death of first spouse. As been noted earlier, the RMDs will continue, but the tax bracket is halved. For example, a couple in the 24% (MJ) bracket could easily jump into the 32% bracket as a surviving spouse filing Single.
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On the issue of Roth v traditional 401k, is there a difference in the matching that is available? If you get a match with the traditional but not the Roth, that would be a big incentive to max out the traditional (or do it up to the limits of matching).
As long as my income is not crazy in 2026, I am pretty sure that I will do my first conversion this year. I have been doing the back door Roth IRA conversions for a while. I think I need to wait until near year-end so that I don’t get surprised with income. Are there any issues with waiting until December?
Waiting until December is preferrable, IMO. Then you have a much better handle on income, and you have until Jan. 15 to pay estimated taxes.
We talked to our FA about doing a Roth conversion. He told to not even think about it until late November at the earliest so we can get a better handle on our 2026 income.
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When we did Roth conversions, we worked with our FA earlier in the year to make tentative plans. Then execute in Dec, after verifying all as exected. I think one year we did a partial rollover earlier in the year.
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Stocks return about 10% per year on average. Bond rates vary depending upon risk, but most retirement portfolios should be earning around 7-8% per year on average.
The downside of doing the conversion at the end of the year is that your traditional IRA or 401(k) is larger at the end of year most of the time, meaning you would pay more tax to convert an equivalent fraction of the portfolio.
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I’m not sure the FA means to convert a specific fraction. I think we’re looking at a specific dollar amount that manages our tax rate and impact on IRMAA. Is a fraction more common?
@Colorado_mom - We do have tentative plans to convert just haven’t determined the amount or the sources as we have a couple of different ways we can go.
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Just make sure you get it done before the end of the year. We had an issue one year where DH needed to have a check sent to him first…and it got lost in the mail. It all worked out, but the timing was tight.
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The terms of the trust. Only certain expenses are allowed to be withdrawn. You have to allow that to be tax exempt. Estate tax is deferred until the second spouse passes.
There’s ABC trust, where C is the pour over. The reason is to defer estate tax. The amount you give to your spouse is not taxed. You give as much as you can to your kids. If anything is left over, you hold it in pour-over trust that won’t be taxed.
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Question for the folks here. I know I am one of the younger regular posters on this thread as I am not retired yet.
What have you done with life insurance policies. I have a life insurance policy with a decent death benefit. It is sort of a hybrid whole life policy. I got it a long time ago when the kids were born. It has a decent cash surrender value. My understanding is the cost of the life insurance will go up as I age. It is possible that down the road the costs will eat into the cash value.
As I get closer to retirement the need for it lessens. I view it now more now as funds to pass down to the two kids. Of course my DW is the beneficiary now.
Have you guys cashed in a policy before death or just let it run its course. Btw, if I had it over to do again I probably would have bought a term policy. But I will say having the cash surrender value as a possible last resort emergency fund is peace of mind.
We discussed life insurance upthread here and I’m sure other places in this years-long meandering discussion but certainly fine to bring it up again and see where it goes–you know, like the never-ending Roth discussions. 
We dispensed with life insurance when our son turned 18. No one should profit from my death. We went over this with our financial advisor before terminating. As a planning instrument, we no longer needed the insurance, and neither DH nor I saw any reason to profit from the death of the other or enrich our child beyond what he is already set to inherit. Besides, all the money that would have gone to paying insurance premiums went into other investments in our portfolio that have performed as well or better than the insurance product, so kiddo will still get that payout, just in another form. Like all financial decisions, everyone needs to assess their own situation.
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Life Insurance Trust is outside the estate. I believe it is estate tax free. We never had it but I know some people include it in estate planning.
I did term only. Life insurance has high fees in most cases.
The issue is that once you are in, it’s hard to get out and apparently the cash value doesn’t match with what you can get.
You may be too deep into it. I’d find a low cost broker and find out your true options. But if you’re young enough, I believe term is the way to go. Then you are buying actual insurance vs a high fee investment.
But people who own policies may be in too deep to get out.
Husband had term insurance to cover house payoff and any lingering debt until he hit like 63 or something and the rates quadrupled. Just canceled it because at that point, had enough to pay house off if wanted to. We both had life insurance through our employer which dwindles down every year and pretty much is nothing now for him and mine went away when I retired. Pretty close to no life insurance left at 70.
Huge fan of term insurance. It expires when you no longer need it, i.e., after you have enough $$ for years and/or after retirement.
For whole life policies, it all depends on the details. There’s a poster on BogleHeads with the sn of Stinky, who is a former broker. If you post your details, they will do all kinds of calcs to see if its worth keeping or cash it in.
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It is called an ILIT (“i” for irrevocable) and must be set up properly so that the insured has no shreds of ownership of the policy. Creation of an ILIT is best left to a lawyer who has experience with such trusts. An ILIT might make sense for those who live in a state with a low estate tax exemption and own a policy with a substantial payout that would put the estate over the exemption threshold. For the rest of us, not so much
See, for example, this article:
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Ditto someone who is over the $15m federal exemption. The insurance proceeds can help pay some of the 40% estate tax due.
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If you have a good handle on income, it might be advantageous to convert on market “dips”. Since my income after retirement is pretty much just dividends that are fairly consistent each each, I converted during one of the Iran driven dips. This gives me more room to enjoy tax free appreciation.
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