Anne Tergesen

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4,485 appearances 83 recordings 1 series first heard Jul 2017 last heard Feb 2025

Anne Tergesen’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Money Moves for the New Year: Gearing Up for Retirement · 27 Dec 2024 podcast

You can pay advisors an hourly rate to help you assess this if you don't want an ongoing relationship with an advisor that can be costly.

So the basic decision comes down to, say I retire today and I think about I'm no longer going to be getting this paycheck and

that I've gotten, right?

Say, for example, I'm currently earning enough money that I'm in the 32% tax bracket.

But next year when I retire, I'm going to be living on money in my bank account.

I'm going to be pulling cash out of my bank account.

I'm going to be in a very low tax bracket next year.

I might pay almost like nothing in taxes.

So the idea is I need to think ahead to when I'm going to be turning 73 or whatever age your required minimum distributions start.

Those are required withdrawals from regular traditional IRAs and 401ks.

And those are taxable and they're taxable at income tax rates.

But you need to look at if I am pulling money out of my required distribution and the IRS, they have tables that tell you how much you're required to take out.

What kind of tax rate am I going to have at that point?

The answer is that if your current tax rate is lower than what you expect your tax rate to be in the future when you start pulling this money out,

you're better off doing Roth conversions at this lower tax rate and paying the tax upfront, which people don't like, at a much lower rate, like 12%, to avoid having to pay 24% in retirement when they have to start taking that money out in the future when their required distribution starts.

So the analysis is really looking at what is your tax rate today versus your tax rate in the future.

And if it's lower today, then there is some logic involved

to thinking about Roth conversions.

And that's where people maybe need some help getting all the pros and cons lined up for them.

To some extent, some people, they know they're ready to retire.

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