It might make sense to include Roth earnings in the IRMAA calculation. However, the contributions were included in income/MAGI when you put the funds in. Including it again at withdrawal would be double dipping. This would be similar to how your brokerage account is treated; you invest with after-tax funds and then only earnings are included as income/MAGI when withdrawn. Ken
I told my kids the worst thing that can happen on your first trip to a casino is winning. Fortunately, none of them shows the slightest interest in gambling, so far. They also understand the odds are against them, much like picking individual stocks. Ken
My "plan" is that portfolio growth and social security COLA will keep up with inflation. Research also shows that real spending may also decline with age (the retirement spending smile). We have only been retired a short time so we shall see, but I am interested in others lived experience. Ken
Interesting. We are delaying social security to reduce future RMDs! We are drawing down our IRAs for living expenses while we wait for social security, thus reducing our IRA balance. Ken
Dan, this is my first year as an AARP tax preparer in Fort Wayne, IN. I would characterize the experience as eye-opening. It has been educational for me to get out of the finance/retirement nerd bubble and see how others view the world, both financially and otherwise.
We are one year into retirement and have about five years' worth of cash and short-term bonds so no immediate concerns. I will rebalance into stocks next week to get back to target allocations. We rebalance quarterly per our investment policy statement. The IPS forces us to mechanically sell high(er) and buy low(er) every quarter and eliminates second guessing.
I put private credit and private equity in my "too hard" pile. Between the opacity and the lockup periods, I can't justify the trade-off for a few (maybe) extra return points. If they get to the point that they need to raise funds from 401(k) savers, I say let them go through the public markets, with all of the associated disclosures and regulations. Most won't need them to reach their goals.
I suspect many younger people are saving in Roth 401(k) accounts now (that's what my kids do) but they weren't available to many of us boomers until more recently. Our main retirement savings vehicle was the traditional 401(k) so we find ourselves with a heavy allocation to pre-tax accounts. Particularly for funds to be passed to the next generation, the Roth is an attractive option. I feel the incentive is less strong for RMD reduction. That said, it seems like the current push in the financial press to convert, convert, convert has gone a bit far.
I really appreciate this article, William. You have clearly given this a lot of thought. The approach you describe is similar to what is referred to as Coast FIRE; Once your future "number" has been achieved, you stop or significantly reduce contributions. Personally, I was never that confident that I knew what the balance would be at retirement, so I kept making significant contributions right up to the end of my employment. I may have oversaved, but that was a risk I was willing to take. ;)
Comments
It might make sense to include Roth earnings in the IRMAA calculation. However, the contributions were included in income/MAGI when you put the funds in. Including it again at withdrawal would be double dipping. This would be similar to how your brokerage account is treated; you invest with after-tax funds and then only earnings are included as income/MAGI when withdrawn. Ken
Post: Tax Free Income Trap, Dealing With MAGI
Link to comment from April 21, 2026
I told my kids the worst thing that can happen on your first trip to a casino is winning. Fortunately, none of them shows the slightest interest in gambling, so far. They also understand the odds are against them, much like picking individual stocks. Ken
Post: Stock Market Contest
Link to comment from April 4, 2026
My "plan" is that portfolio growth and social security COLA will keep up with inflation. Research also shows that real spending may also decline with age (the retirement spending smile). We have only been retired a short time so we shall see, but I am interested in others lived experience. Ken
Post: Coping with inflation in retirement, what’s the plan?
Link to comment from March 30, 2026
Interesting. We are delaying social security to reduce future RMDs! We are drawing down our IRAs for living expenses while we wait for social security, thus reducing our IRA balance. Ken
Post: Something to Think About
Link to comment from March 29, 2026
Dan, this is my first year as an AARP tax preparer in Fort Wayne, IN. I would characterize the experience as eye-opening. It has been educational for me to get out of the finance/retirement nerd bubble and see how others view the world, both financially and otherwise.
Post: Debriefing
Link to comment from March 28, 2026
We are one year into retirement and have about five years' worth of cash and short-term bonds so no immediate concerns. I will rebalance into stocks next week to get back to target allocations. We rebalance quarterly per our investment policy statement. The IPS forces us to mechanically sell high(er) and buy low(er) every quarter and eliminates second guessing.
Post: Any concern?
Link to comment from March 28, 2026
I put private credit and private equity in my "too hard" pile. Between the opacity and the lockup periods, I can't justify the trade-off for a few (maybe) extra return points. If they get to the point that they need to raise funds from 401(k) savers, I say let them go through the public markets, with all of the associated disclosures and regulations. Most won't need them to reach their goals.
Post: Private Credit Stress?
Link to comment from March 27, 2026
I suspect many younger people are saving in Roth 401(k) accounts now (that's what my kids do) but they weren't available to many of us boomers until more recently. Our main retirement savings vehicle was the traditional 401(k) so we find ourselves with a heavy allocation to pre-tax accounts. Particularly for funds to be passed to the next generation, the Roth is an attractive option. I feel the incentive is less strong for RMD reduction. That said, it seems like the current push in the financial press to convert, convert, convert has gone a bit far.
Post: Something to Think About
Link to comment from March 25, 2026
Totally agree with this philosophy. In addition, my late father often said, "the harder I work, the luckier I get".
Post: When Luck Rises, Be Ready to Dig
Link to comment from March 19, 2026
I really appreciate this article, William. You have clearly given this a lot of thought. The approach you describe is similar to what is referred to as Coast FIRE; Once your future "number" has been achieved, you stop or significantly reduce contributions. Personally, I was never that confident that I knew what the balance would be at retirement, so I kept making significant contributions right up to the end of my employment. I may have oversaved, but that was a risk I was willing to take. ;)
Post: Should You Stop Contributing To Your IRA?
Link to comment from February 10, 2026