It’s easy to assume that the opportunities to optimize your taxes are behind you by the time you hit your 60s. That’s not true because this decade offers some great ways to help your tax planning, especially if you still have a steady income source and are close to retirement. The idea is to focus on moves that will help lower taxes now or to prevent larger tax bills later on. Here are tax strategies you can still make that matter and why they can have a huge impact. Max Out Catch-Up Retirement Contribu ...

Wanting to retire with a $250,000 annual lifestyle is more than about covering the basics. You probably want to retire with a certain level of comfort and activities like travel that offer more flexibility that’s in line with what high earning professionals are used to. If you want to aim for this much retirement income, sometimes it may not make sense to follow traditional advice. Sure, there’s a number you should aim for to be able to afford this lifestyle, but you also need to think about whether you n ...

Core Insights - The article discusses the financial challenges faced by newly widowed individuals, particularly focusing on the need to reassess retirement planning and investment strategies after the loss of a spouse [2][4]. Financial Situation Overview - Widows at age 66 often receive 100% of their deceased spouse's Social Security benefit, but household expenses typically remain at 75-80% of the previous income level [5][7]. - The transition from joint to individual financial planning is highlighted as a primary challenge for those in this demographic [8]. Income and Growth Balance - The core financial tension involves balancing immediate income stability with the need for long-term growth, especially given the potential for life expectancy to extend 20 to 25 years [4]. - Inflation poses a significant risk to purchasing power, necessitating a portfolio that can sustain withdrawals while also maintaining growth [4]. Portfolio Allocation Strategies - A conservative portfolio allocation of 60% bonds and 40% stocks prioritizes stability but may not keep pace with inflation over the long term [6]. - The current yield on long-term Treasury bonds is around 4.6%, while stocks have returned 14.5% over the past year, illustrating the trade-off between safety and purchasing power [6]. Strategic Financial Planning - A bucket strategy is recommended, allocating cash for 2 years, intermediate bonds for 3-7 years, and stocks for long-term growth needs [7]. - Roth conversions of $20,000 to $30,000 annually before age 73 can help reduce future tax burdens when Required Minimum Distributions begin [7].

Core Insights - The article discusses lesser-known rules regarding 401(k) plans that can significantly impact retirement savings and financial planning Group 1: Withdrawal Rules - The Rule of 55 allows individuals aged 55 or older to withdraw from their 401(k) without a 10% penalty if they separate from service [2] - State public safety employees can access this rule as early as age 50 [2] Group 2: Contribution Limits - In 2026, the contribution limit for 401(k) plans will be $24,500, with an additional catch-up contribution of $8,000 for those over 50, totaling $32,500 [3] - For individuals aged 60 to 63, the catch-up contribution limit increases to $11,250, allowing for a total contribution limit of $35,750 [3] Group 3: Tax Benefits - Contributing the maximum amount to a 401(k) reduces taxable income, thereby lowering the overall tax burden [4] Group 4: Roth Conversions - Converting 401(k) assets to a Roth IRA allows for tax-free growth and tax-free withdrawals, beneficial during years of lower income [5] Group 5: Loans Against 401(k) - Some 401(k) plans permit loans against the account, which must be repaid with interest; this option is recommended for emergencies [6] - If employment ends before the loan is repaid, the outstanding balance is taxed as a withdrawal [6]

Core Insights - Required Minimum Distributions (RMDs) are often viewed negatively, seen as a financial burden that retirees should avoid [1][2] - Roth conversions are generally perceived as a smart financial strategy, allowing individuals to pay taxes upfront and benefit from tax-free growth [1][2] Group 1: RMDs Reputation - RMDs are mandated by the IRS for individuals aged 73, requiring withdrawals from pre-tax retirement accounts like 401(k) plans and traditional IRAs [3] - The lack of control over withdrawals is a significant concern for many retirees, leading them to prefer Roth conversions [3] Group 2: RMDs in Retirement - By age 73, retirees are typically more experienced in managing their retirement budgets and may have already depleted some of their savings [4] - For some retirees, RMDs can provide psychological relief and may not be viewed as a financial disaster [4] Group 3: Benefits of RMDs - RMDs can encourage retirees to access funds they might otherwise hesitate to use, serving as a mechanism to promote spending [5] - A significant portion of retirees experience anxiety about spending their own money, with 46% expressing this concern [6] - Many retirees lack knowledge about managing RMDs, with nearly 49% unsure how to handle them, indicating a need for better financial education [7]

Core Insights - Early retirement at 60 with $1.5 million may seem feasible, but the five-year gap until Medicare eligibility at 65 introduces significant healthcare costs that can jeopardize retirement plans [2][5]. Financial Implications - The 4% withdrawal rule allows for $60,000 annually, but ACA marketplace premiums for individuals aged 60-64 without subsidies can take a large portion of these withdrawals before accounting for deductibles and out-of-pocket expenses [4][8]. - The expiration of enhanced ACA subsidies in 2026 is expected to lead to steep premium increases for middle-income Americans aged 50-64, exacerbating financial strain [6][8]. Strategic Planning - Effective strategies to manage pre-Medicare healthcare costs include keeping modified adjusted gross income below ACA subsidy thresholds, which can significantly lower premiums. This may involve timing Roth conversions, managing capital gains, and potentially delaying Social Security benefits [7][8].

“My question is how much should I convert in my 401(k) every year prior to turning 73 when required minimum distributions kick in?” (Photo subject is a model.) - MarketWatch photo illustration/iStockphoto Dear Help Me Retire, I am married, retired and 68 with an income of $200,000 a year between my pension, Social Security and investments. Everything is pretty much paid for, and we are clearly bringing in more than we spend. My question is how much should I convert in my 401(k) every year prior to turni ...

Ready to talk about taxes? On this episode of Market Sense, we dive into the new tax law, and how it could impact your 2025 taxes. A Fidelity branch leader and former tax preparer will highlight some of the changes and strategies for itemizing, charitable giving and Roth conversions. Plus, all the latest market headlines in 20 minutes. Topics covered: • 2025 tax changes • SALT • Roth Conversion • Charitable Contributions 00:00 Market Sense Introduction 01:39 Latest market headlines 04:22 Latest market headl ...

Core Insights - The article discusses the considerations for converting a traditional 401(k) into a Roth 401(k), particularly focusing on the implications of current and future tax brackets [2][5]. Current Tax Bracket - The current tax bracket is a known value, with an example provided of a combined income placing a couple in the 35% federal tax bracket [6]. - Variability in income from year to year can complicate the determination of the current tax bracket, suggesting that analysis should be conducted later in the year for accuracy [7]. Future Tax Bracket - Estimating the future tax bracket is more complex due to uncertainties over decades, including changes in career, income, and tax laws [8]. - Despite the uncertainties, reasonable assumptions can still provide useful insights for planning [8]. Roth Conversion Considerations - Roth conversions may be beneficial if the current tax bracket is lower than the expected future tax bracket, although being in a high current bracket generally suggests that conversions may be less advantageous [5].

Core Insights - The article discusses the nuances of Roth IRA contributions and conversions, particularly for retirees who may not have earned income [2][3][5]. Group 1: Roth Contributions vs. Roth Conversions - Roth contributions require earned income, meaning retirees relying solely on Social Security or pensions cannot contribute directly to a Roth IRA [5][6]. - Roth conversions allow retirees to move funds from a tax-deferred account to a Roth IRA without needing earned income, as taxes are paid on the converted amount [3][7][8]. - The distinction between contributions and conversions is crucial for retirement planning, as conversions can provide tax benefits even in low-income years [1][5].