Smart Retirement Planning: Roth Conversions, Mortgage Decisions, and Tax-Saving Strategies
Navigating retirement planning isn’t just about saving enough—it’s about knowing how to manage your money once you get there. In this financial Q&A session, a range of real-life retirement scenarios helped highlight practical strategies for Roth conversions, tax efficiency, mortgage decisions, and maximizing long-term success. Here’s what we can learn.
Retirement Planning with Multiple Income Sources
Jack and Swann from Florida are a classic example of multi-bucket retirement planning. With a mix of tax-advantaged accounts, Roth IRAs, and taxable savings, plus a $30K annual pension (no COLA), they’re well-positioned. Their advisors recommended not paying off a 2.5% mortgage early and instead using Roth conversions in retirement to reduce long-term tax liabilities.
Using Roth Conversions Before Tax Hikes Hit
Kevin from Arizona had over $7.9M in assets and wanted to minimize future taxes. The advice? Delay Social Security to age 70 for maximum benefits and take advantage of Roth conversions in 2025 and 2026—the final years of current lower tax brackets. Converting up to the top of the 22% bracket may offer significant savings.
Should You Pay Off the Mortgage or Invest?
Jennifer from Colorado had a 5.4% mortgage on a $1.1M home. Rather than rush to pay it off, her team suggested continuing to invest to maintain liquidity and take advantage of market growth. If rates drop, she can always refinance. Making small extra payments may offer a mental comfort without sacrificing flexibility.
Establishing Residency in a Tax-Friendly State
Skipper plans to move out of hot Texas and settle in tax-free Florida. The steps? Live there the majority of the year, get a Florida driver’s license, register to vote, and move financial accounts. These steps help secure residency status and avoid state income taxes.
Testing Early Retirement with $5M in Assets
Harry and Helen from Minnesota wondered if their $5M could support their $170K lifestyle. With a 3–4% withdrawal rate, their plan is financially sound, but advisors still suggested they “test” retirement for a year to ensure lifestyle fit before fully exiting the workforce.
Retiring Abroad for a Lower Cost of Living
A Tennessee couple looked to retire in Asia. With $1.3M in IRAs and a 6.7% withdrawal rate, the strategy may work if the wife delays retirement to age 65. The team advised visiting locations first to ensure comfort before making a full commitment abroad.
Roth Conversion Funding: Where Should It Come From?
Harry and Helen also considered which assets to use for Roth conversions. Advisors recommended using tax-deferred funds or taxable investments, keeping conversions small enough to stay in favorable tax brackets. The goal is long-term tax diversification and avoiding large RMDs later.
Delaying Social Security: Worth the Wait?
For many retirees, the decision to delay Social Security to age 70 can result in significantly larger lifetime benefits, especially for healthy individuals or singles. Big Al and Joe emphasized that it’s often a smart play for those who expect to live well into their 80s or 90s.
Lifestyle Flexibility Matters Most
Perhaps the most overlooked advice? Stay flexible. Whether it’s the car you drive, the wine you buy, or how often you eat out, small lifestyle adjustments can be the difference between retirement success and stress. Liquidity and adaptability help weather market shifts and personal changes.
Final Thought: Retirement Is Personal—But Planning Is Essential
Every retirement scenario is different. Whether you’re flush with savings or trying to make your portfolio last, your best bet is a mix of tax-smart withdrawals, flexibility, and long-term thinking. The more you plan now—especially when it comes to taxes and Social Security—the more freedom you’ll enjoy later.
Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.
IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.
• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
