You’ll be gathering (and owing taxes on) Social Security installments. You may choose to do some counseling or freelance work, on which you’ll need to pay self-employment tax.
Furthermore, once the children grow up, you quit adding to the retirement savings, you lose some significant tax deductions and tax credits. This could leave you with higher taxable income, even after you quit your job.
Related: 3 Ways to Raise Financially Responsible Kids
Roth IRA Conversion Ladder Works Best For:
Early Retirees with Low Income – People who live on modest income from long-term capital gains which are taxed at 0% under the tax bracket of 15% or below.
Retirees Who are Willing to Stretch Transition from IRA to Roth IRA – Transitions from a Traditional IRA to a Roth IRA are taxed as regular income so it’s useful to spread the change over a huge time span. That way, one doesn’t expand your taxable income excessively in any given year.
Related: The Reality of a Million Dollar Retirement
Now, that I have elaborated Roth IRA Conversion ladder alongside sharing conventional wisdom (for whom it works) and scrutinizing the strategy, it is you who needs to take the final call, assess and go on to choose whatever best fits your needs.
This article has been republished with permission from Modest Money.