Gary brings up a great point, When I was working (late 60s until around 2000) the standard line was: “
Defer income while you’re in a high bracket and pay a lower tax rate on it after you’re retired and earning less.” That may have happened in my case - but I’m not so sure. For one, back when that
creed was in vogue Social Security wasn’t considered taxable income. Today at least a portion of it is
if you also receive a pension and exceed a certain level of income:
“Congress passed and President Reagan signed into law the 1983 Amendments. Under the '83 Amendments, up to one-half of the value of the Social Security benefit was made potentially taxable income.”
https://www.ssa.gov/history/taxationofbenefits.html.
A pension (with cola) has pushed me over 20+ years into a higher tax bracket than I expected when working. The
% taken doesn’t seem appreciably lower than during the working years. In addition, Michigan also levied an income tax on pensions - previously exempt.
I think when it comes to this kind of dynamic (figuring out what tax bracket you’ll be in 30 years down the road) you’re best to play it safe. No one really knows. I’m not sure using a Roth at an early age is the answer. Might be. But if, as a seasoned investor, you can play the percentages and convert a
portion into an asset you think is undervalued - it’s worth paying those taxes a few years earlier than you might have otherwise and doing the conversion (in stages over several years).
BTW - Roths aren’t subject to RMD. What’s not to like?
