5 Reasons Christmas is the Right Time to Focus on Your Retirement Planning

Posted by on Dec 19, 2016 in Blog | 0 comments


How do you plan to spend this holiday season? Purchasing gifts for family? Splurging on an exotic vacation? Or visiting friends in far off places? I am sure one or more of these thoughts would have resonated in your mind when you thought of Christmas. But, have you ever included your retirement savings in your Christmas shopping list? None of us like to be presented with the prospect of disease, disability or death but it is always good to plan ahead and stay prepared for the future. Christmas presents a perfect time to plan for the coming year.

Whether you’ve just turned 18, recently started your professional career, halfway there or have less than 10 years to retire, here are 5 big reasons to include retirement savings in your shopping list this Christmas:

1. A Little Extra Early Enough Could make a Massive Difference

If you are in the age bracket of 18-25, you are sure to spend your Christmas buying gifts for friends and family members and of course the latest bling of the season, would be at the top of your “must-buy” list of festive wear. But wait! If you desire that early retirement, you’ve got to put aside something for your social security.
Make the most of the holiday season and plan your retirement in advance. The sooner you start; the more you will save and this will get you closer to your goal of a risk-free retirement much faster than you think.

2. Use the Spare Time to Review all Your Income Sources

If you think that you still have some 30 odd years to retire and that your retirement savings can wait a while, think again. Most retirement plans take about 37 or more years to achieve maximum returns from retirement plans. Christmas gives you the time to assertively plan your retirement and your social security by reviewing all your income sources by the 31st. December 31st is the time by which you should have evaluated your pay statement to ensure that all your contributions have been deducted including your super-annuation fund and tax-deductible retirement savings.

3. Catch Up if You’ve Fallen Behind

Yes, Christmas is totally incomplete without shopping but be sure to divert that “extra” bonus fund into your retirement kitty. Christmas should not only be about spending, but also about saving especially if your countdown to retirement has begun and you still see yourself falling behind on your retirement savings. Since it is the end of the year, you can get all the facts right and make all the calculations on your current savings. Determine what makes a guaranteed lifelong income after you have made all the provisions for a health insurance protection post your retirement.

4. Final Opportunity to Maximize Your Contributions

The month of December brings you one last opportunity to contribute the maximum 10% to your superannuation fund. If you are a member of an approved retirement savings scheme, you can raise your contributions to 20% of your gross income and reap rich dividends in future. If you have any debts, clear them before you shop for Christmas as this is the best time to give.

5. Plan for a Prosperous Retirement

Once you are fully aware of all your income sources, it is time to plan how you will make your withdrawals in a timely manner. Christmas is the correct time to evaluate all your current accumulations and if they would suffice to fund your existing lifestyle post-retirement. Spend your holidays determining where you wish to spend your life during your golden years and if you have enough to support the biggest transition of your life. This the time to determine if you would need to stay a little longer in the workforce or have enough to retire at the right time.

How to Overcome the 5 Greatest Risks Affecting Your Retirement Savings

Posted by on Nov 16, 2016 in Blog | 0 comments

Proper retirement planning is the only way to ensure your financial security and comfort after you hang up your boots, but you have to be smart about it. It isn’t just about putting money into an IRA or 401(k) every month. You also need to account for potential risks that could affect your savings or spending power too.


We’ll look at the 5 biggest risks to your retirement fund (as well as possible solutions) below:


1.Financial Risk – Inflation and low interest rates can eat into your retirement savings. The effects are more serious when you’re living on a fixed income, so consider working part-time to counter them.

Investing in stocks, stock funds, inflation-protected securities and annuities can help offset inflation. Certain pension programs and Social Security benefits also adjust your income for inflation while you’re working. Buy investments with real and long-term interest rates (higher than the cost of inflation).


2.Market Risk – Stock market fluctuations (sequence of returns) are another major worry for retirees, especially after the devastating impact of recent market crashes. Plan against this possibility early on!

Diversify your investments so the risk from potential stock market losses is spread out. Avoid putting all of your retirement savings in stocks, but consider investing in guaranteed investment contracts, global bonds and real estate investment trusts instead. Play with riskier investments only if you’re a long way from retirement.


3.Personal Risk – Unemployment, marriage/divorce, death of a spouse and other changes in your life or family’s needs can also lead to unexpected expenses, affecting your retirement security.

Plan for situations where you may need to offer financial support to a family member, split your assets after a divorce, receive lower pension/Social Security benefits if your spouse dies, etc. Invest in life insurance, healthcare plans and other financial vehicles that protect against these unfortunate possibilities.


4.Longevity Risk – Retirees are living longer than ever, and there’s a chance you may outlive your retirement savings completely. A longer lifespan also increases the chance of facing other risks!

The best solution is to save every dollar you can. Cutting down on expenses today can help you tomorrow, so balance this risk against your current and future needs. Don’t assume that what you’re saving now is enough, since a larger nest egg will also help you handle the impact of other retirement risks.


5.Business Risk – Your employer-provided pension plan may not be as secure as you think, since there’s no guarantee against their bankruptcy or the insurer’s solvency. Invest in your own 401(k) or IRA too.

With defined-contribution plans, balances are not affected by business risk unless they’re concentrated in employer stocks. If you’re relying purely on employer-sponsored plans, take potential losses of future contributions and market performance of investments into account while allocating assets.


At Self Directed Retirement Plans LLC, we can put you in total control of your retirement dollars and open up many investment asset classes most people never think about. Contact us to learn how!

The New Retirement Rule – 7 Key Observations

Posted by on Nov 9, 2016 in Blog | 0 comments

If you have come across the recent retirement rule you must be wondering what it is all about and how does it concern a common American? Well, the new retirement rule will change the way you have been saving for your retirement and will bring along the benefits that you have always wanted. Here is everything you want to know:


1.The Fiduciary Level of Care – This means that the adviser has to act in the best interest of the client. In simple words, the adviser will now be required to tell his client all the conflicts of interest. The new rule requires the financial professionals who give you advice on your retirement funds to act as fiduciaries. Your interests will be put ahead of their own gains.

2.In your Best Interest- April 2017 onwards, a professional who is giving you investment recommendations shall be legally required to give you advice that is best for your situation. Furthermore, this new standard will only be applicable to the retirement accounts. The rule requires any new advice to be in your best interest and not necessarily allow funding that will provide the maximum compensation to the adviser.

3.The Effectiveness of the Rule – Irrespective of whatever accounts they work with; the investment advisers will now have to put your interest first even if it costs them some potential income. If the advisers do not follow this rule, you, as an investor, will have greater recourse to get your money back. Additionally, you can even take legal action.

4.Disclosures – As mentioned above, the financial advisers will have to disclose every commission they received for all products they recommend. Moreover, this new rule may prompt advisers to move from commission-based model to fee-based models. The advisers, now, cannot hide anything from you.

5.Increased Access to the Saver’s Credit – According to the new retirement rules, the workers can still qualify for the saver’s credit, even if they earn a little bit more. The cut-off for the adjusted gross income has been set up to $30,750 for individuals, $61,500 for the couples and $46,125 for heads of households. In addition to the claim for a tax deduction for additional 401(k) or IRA contribution or a Roth account deposit, the investors can also claim the saver’s credit.

6.The rules come into effect from April 2017 onwards. However, all the procedures required under these rule may not be adopted until January 1, 2018.

7.Possibilities of this Rule being Blocked– It is possible that the rule may be blocked because both financial services and insurance industries have protested against it. It is also possible that the Congress may try to kill the rule. The new regulations have been framed taking into account the best interest of the investors and to provide them with the best services in retirement planning. Only time will decide what effect it has on the lives of retirement investors.

Don’t Let Early Retirement Stop You from Living the Happy Life

Posted by on Nov 2, 2016 in Blog | 0 comments

In order to fulfill our day to day demands, we all work at least 8 and some12 hours each day. During this fight, what happens when you receive a termination letter from your company at the age of 55? You had planned your life perfectly, including a retirement at 65 but a forced early retirement would be a disaster for you both mentally and financially. There could be several reasons behind this FER such as health, stamina, technical upgraded knowledge, recession or anything else.

early retirement

Don’t panic because you are not alone. According to research, most American workers are forced to quit their jobs between the age of 55 and 58, instead of their planned retirement age. So, what should you do to save yourself from such a disastrous situation? Just one thing: Don’t stick to just one plan but have multiple ones such as financial planning, extra income resources or savings. Don’t just let early retirement stop you from what you want to achieve in your life.

1.Be Realistic about your Financial Condition: Don’t panic because you have lost your job. Also, avoid using credit cards to save your cash as it will increase your debt. Keep one thing in mind that you don’t need to hide your financial reality from yourself. Always try to make a financial assessment such as monthly expenses and loans etc. Do the analysis of your cash flow and try to avoid the extra expenses.

2.Avoid Emotionally Driven Decisions: Withdrawing amount from your 401k account just because you are having a short term financial crisis would be a foolish decision. When you are laid off or downsized, you have the opportunity to move your company 401 k to a rollover ira or a self-directed 401k. With a self-directed 401 k, you have the ability to take a personal “loan”. This is not a taxable distribution but a loan which has a five-year payback. This could be one way to tide you over until you find other employment and then you can pay the loan back without paying any taxes or penalties. This should be a “last case” decision just in case you never can repay the loan.

3.Look for Additional Income Sources: Chances of getting job decreases with increasing age, but don’t lose hope and try to find a new job. Get registered with various recruitment agencies, talk to a friend, register on recruitment portals online or start networking but never give up, because leaving the job factor on the side, the golden asset you have is an experience.

4.Home Equity is a Better Option: In case you really need to borrow some money to cope up with the financial crisis, then home equity line is one of the better options. You will be charged lower interest rates/fees in comparison to your credit cards.

5.Health Insurance: Even if you have lost your job, health insurance is not an option to miss at all. If you don’t qualify for the government planned insurances, go for some low-cost insurance plan but never let your health insurance get collapsed. (Try insurance exchange that comes under the Act “Affordable Care”)

6.Social Security: Taking social security benefits varies according to the situation but if you need to choose between taking money from IRA and claiming social security, the latter would be more beneficial (in short life expectancy case). Although it is often suggested that you should wait until the age of 70 to claim your social security.

7.Consult a Certified Financial Advisor: Seeking advice from a CFA would be the best option as he can help you in all the above mentioned plans. If you get panic easily and not a good decision maker then your CFA would surely help you to turn your early retirement into a joyful one.

An early retirement can be upsetting and depressing but a good strategy to cope with it is all you need. We would suggest you seek the advice of a financial planner now, to manage any financial ups and downs in your future.

70 – The New Retirement Age

Posted by on Oct 26, 2016 in Blog | 0 comments

The New Retirement Age – After working day in and day out for years, everyone wants to retire and spend the rest of their lives, just enjoying and having fun. However, not many of us are able to do it because we don’t have enough savings in our retirement accounts. The average retirement age in America is 63 but an increasing number of people are forced to retire at the age of 70 or more in order to meet their needs. Over 5% of people feel that they will never be able to retire. Most of the people plan to retire at 65, however, they end up working much longer than that.


What is It All About?

Most of the people in America have to save independently in order to make sure that they have a reasonably comfortable retirement. However, almost 33% of Americans over the age of 55 were found to have no retirement savings at all. Not only the older people but many young people also feel that they won’t be able to retire until 70 or even later. This is a worrying trend, taking into account, the fact that young people still have a many years to work and save.

The Bright Side

It may not look very good but the idea of working after 65 is not really a bad thing always. Working longer comes with many more benefits other than the obvious financial benefits. For example, research has found that people who work for longer tend to lead much healthier and longer life.

The longer a person works, the more time they have to do their retirement planning. Working for longer means, you have to spend a fewer number of years in retirement. While you have to have a self-sponsored health plan in retirement, working for longer gives you continued access to a health plan that is sponsored by an employer.
Not only this but if your salary goes up over a period of time, working during the time when your salary is at its peak will lead to an increase in the amount that you will get from social security. Furthermore, if you hold off on claiming social security until the age of 70 or later, you are expected to get huge benefits from delayed retirement.

Why You may Not be Able to Work until 70?

A study has found that 60% of Americans end up retiring earlier than they have planned. The reason behind the same is poor health, loss of job due to other responsibilities, need to care for a spouse or a dependent, etc.

Start Saving Now

The idea of retiring at 70 or later may not sit well with you for various reasons so it is always better to start saving as early as possible to avoid difficulties and problems later in life.

How Good is the Idea of Increasing the Retirement Age beyond 67?

In the past, raise in the retirement age came with a reduction in benefits earlier in life. The increase in retirement age 70 may lead to a 13% to 15% reduction in benefits that you received at the age of 62.
Those who support the idea of an increase in retirement age say that life expectancy has increased and therefore people can continue to work for more years. However, a report found that low-income people live fewer years than high-income people. This increasing gap between the lifespan of rich and poor eats away all the benefit that poor workers should get from social security. Moreover, not everyone is healthy enough to continue work in later years of their lives.

The Bottom Line

It may be safe to say that irrespective of what age you are planning to retire at, it is always a good idea to start saving as early as possible in life.

The Pre-Retirement Checklist

Posted by on Sep 23, 2016 in Blog | 0 comments

Are your ready to retire

Image Credit:Foxbusiness

Does it seem like your finances keep getting more and more complicated? It seems that way because it’s true. And that means that you need to keep things organized. Not only for yourself, but ultimately for your children.

It’s not that difficult. In just a few pages, we’ll walk you through the steps that you need to take. Sure, it’ll take a little bit of time. But if you don’t do it, there will come a day when your children will spend many, many hours trying to figure out where all the accounts are and how to access them and they’ll hope that they don’t miss anything that should be left to them.

Your Lifestyle 

Things that you want to take time to consider and discuss with your spouse (if appropriate) and possibly even your children

  • Should you consider downsizing? Will you continue to live in the family home? Or is it time to consider something smaller and easier to maintain?
  • Will you do more traveling? How much will you budget for travel each year?
  • Will you take up or expand a current hobby? Will that require additional space or equipment? Could it provide some side income?

Income & Expenses 

Will you have enough money to retire on? Will you outlive your resources?

Assets & Liabilities

  • List of all bank accounts – including branch location, title of the account and account number
  • List of all brokerage accounts – including title of account, phone number for broker and account number
  • List of all mutual fund accounts – including title of account, phone number and account number
  • List of all life insurance policies – including title of account, carrier, phone number and policy number
  • List of any annuities – including title of account, carrier, phone number and policy number
  • List location of any safety deposit box and location of keys – including bank branch and name on the box
  • Location of any storage units (include passwords & location of keys)
  • Location of any hidden storage spots in your house/garage
  • List of any collections or items of value (jewelry, artwork, collectibles, antiques, etc.)
  • Location of any deeds or titles (home, auto, etc.)
  • List of all credit card accounts – including contact numbers for each
  • List of any auto loans – including holder of loan and their contact information
  • List of any mortgages or home equity loans – including holder of loan and their contact information
  • List of any open student loans – including holder of loan and their contact information

Important Legal and Financial Documents

  • Have a proper will. Make sure it’s legal and up to date.
  • Check the beneficiaries on any life insurance policies.
  • Check the beneficiaries on any retirement plans (pensions, IRAs, 401Ks, etc.).
  • Make sure you have any necessary medical directives.
  • Have a power of attorney in case you’re incapacitated.

Contact Information

  • Notify your executor (or whoever will handle your affairs when you die) where they can find important documents
  • List of all your online passwords (including phones, tablets, etc.)
  • List of all automatic payments on your credit cards and from your bank
  • List of people to notify on your passing
  • Names and contact information for your legal and financial advisors
  • Names and contact information for doctors
  • Names and contact information for any pastors or spiritual advisors
  • Contact information for home, auto, and medical insurances

End of Life Arrangements

Make plans now while you still can!

  • Selection of a funeral home (and information about prepayment)
  • Instructions for the funeral service
  • Selection of a cemetery (and information about prepayment)
  • Information for obituary (if desired)

The Dollar Stretcher has provided frugal living information since 1996. To keep up with your finances subscribe to ‘After 50 Finances’ and visit our boomer section today! Did you think of something that should be added to the list? Then please send us an email and tell us what it is.

If you have any friends heading into retirement, please feel free to share this with them.


Why Every Age Group Has a Different Attitude towards Work and How It Defines Their Retirement Dreams

Posted by on Sep 19, 2016 in Blog | 0 comments

Does retirement planning trigger positive or negative emotions in your mind? Did you know that your impression of retirement is predefined by your life experiences? Different age groups tend to have a different set of beliefs and ideas that shape their decisions with regard to retirement planning. Let’s take a look at the generational persistency that prevails on the subject of retirement.


The Generation Gap in Retirement Planning

Baby boomers generally have a positive view of retirement as their perception is colored by retirement planning commercials. Financial services often tend to depict a utopian existence post retirement where life is all about exotic beaches, golfing getaways, dreamy sailboats, and an unrestricted flow of classic Pinot Noir.

Unlike the baby boomers, the Millennials tend to have a negative perception towards retirement because for them, retirement is like a far-fetched dream. The only thing that comes to their mind when they think of retirement is early buffet dinners in hot and humid Florida.

According to a recent study published by the AARP, full-time workers who were 35 years and below were pessimistic towards their retirement and this attitude is moving steadily up the ladder to baby boomers and Generation X. 87% respondents wanted to retire someday while 70% of those were only hoping that they could do so by the age of 65. This entire set was not able to accurately assess their readiness to retire anywhere before 65.

To substantiate this pessimistic perception with real facts, NRRI conducted a study and it revealed that more than 50% of American households did not have the adequate finances to maintain their standard of living through retirement.


The Impact of Your Attitude at Work

Even though Baby boomers and Gen Xers know they would need to work longer for a financially secure retirement, only 1 in 10 is motivated to go to work every morning. This means that more than 80% of those above the age of 35 want to retire early but are forced to work longer as retirement and employment are interdependent.


The Vicious Circle of Work Life V/s The Virtuous Circle of Work life

Those who do not like their job tend to overvalue their retirement and undervalue their job. When this happens, performance is bound to get affected and this in turn affects the career ladder and suppresses your savings. It is like a vicious circle – if you hate your job, you under perform and when you under perform you earn less and fewer earnings mean a late retirement.

On the other hand is the virtuous circle of work life – if you love your work, you are likely to undervalue your retirement but this will improve your performance, accelerate your professional growth and you will be better prepared for retirement planning.

While it is not possible for each one of us to have our dream job, it should not keep us from reaching our full potential and realizing our retirement goals. If you are not happy with your current job, update your resume and hunt for something better but don’t let your attitude impact your retirement planning.

Whether you are a Baby Boomer,a Gen Xer or a Millennial; retirement readiness is all about planning in advance and investing in the right plans. Talk to our retirement planning expert today at (866)639-0066 and take your first step towards a comfortable retirement.

Five Ideas to Help Free You from Retirement Anxieties

Posted by on Sep 12, 2016 in Blog | 0 comments

Did you start saving as soon as you got out of college? Can you count on your steady paychecks for the rest of your life? Does the term retirement give you jitters?


The top three reasons that induce fear and anxiety in most people who are nearing retirement are:

  • The possibility of running short of money or living too long
  • The rising cost of healthcare
  • The stress of maintaining the same standard of living during retirement

Free Yourself from Retirement Anxieties
You can lower your anxiety and overcome your retirement worries with careful financial planning.Here are 5 practical ways to help you beat the retirement blues and help you to a worry-free retirement:


1. Know Your Numbers
Calculate your finances to ensure that you don’t outlive your retirement savings. Knowing the numbers will help you plan ahead and live a comfortable life when you no longer have a nine-to-five job. But try keeping the worst-case scenarios in mind so that you can handle sudden shocks without losing your lifetime savings.


2. Be Frugal with Your Finances
The best way to conquer your retirement fears is to be frugal with your lifestyle. Frugal does not mean you resort to a penny-pinching approach. It only means that you should spend less and save more. Make small changes like managing with one car, repairing instead of replacing, cutting down on eating out, buying only what you need, selling the clutter, cutting down or eliminating smoking and drinking, canceling unused subscriptions, and saving energy.


3. Diversify Your Financial Portfolio
Think beyond bonds, stocks, mutual funds and ETFs. If you can open a self-directed retirement account there is a myriad of alternative investments out there beyond what the normal financial advisory firms offer. Contribute to 401(k)s and workplace retirement savings plan and take advantage of company matches. This is “free money” and will help to build your nest egg. In company plans, keep up to date about new investment options which become available. Diversifying your portfolio will ease your retirement anxieties. Shifting some of your savings to conservative vehicles will help ensure that your finances will not be as vulnerable to market fluctuations.


4. Take Advantage of Low Interest Rates
Home Ownership is a dream for most people. Interest rates are at almost record lows. If you have a mortgage, speak with a professional to see if refinancing would be a good option. Remember, with a 30 year fixed mortgage, it takes the first 23 years to pay off the first half of a mortgage and 7 years to the second half. So many people refinance to a lower rate ,let’s say at 5 years, but they sign right back up to a new 30-year amortization. If you are fortunate to refinance to a lower rate, don’t add more years to your plan – it doesn’t make sense – it does to the mortgage lender but not for you.


5. Seek Social Support
Retirement brings you the opportunity to catch up on your social calendar. As you get close to retirement, ease into your new life style.Go out, make new friends, explore your artistic abilities, take up cooking classes, discover your knack for creativity, attend seminars, travel to places and catch up with old friends at your local coffee shop. Spend more time socializing and less time worrying about your payments and taxes. The transition from a profession with a steady source of income to a newly-retired person surely invites fear and anxiety but if you follow these 5 simple tips, it will help you to overcome a lot your financial fears and enjoy the fruits of your labor.


Proper retirement planning is all about making the right investments. To explore safe investment options that can maximize your returns, contact us at (866) 639-0066.

Why is Roth IRA the best investment strategy for young adults

Posted by on Aug 9, 2016 in Blog | 0 comments

The ‘twenties’ is the time when you start your professional life and work on building a lustrous career. It won’t be a surprise that every young adult would be totally focused on climbing the next rung of the corporate ladder. Apart from that, as a young adult, you should seriously think about investing your hard earned money for the security of your future. As a young investor, you will be surrounded by a number of investment options like 401K, insurance policies, mutual funds, etc., but would Roth a IRA be the best investment strategy for you. Let us see why.

roth ira

Why Should You Consider Roth IRA in your Twenties

If you are a twenty-something millennial, then Roth IRA would be a great investment vehicle for you. You can contribute money that is already taxed, which means that when you withdraw from this fund later in life (after the age of 50 ½), you won’t have to pay any taxes on the withdrawals. Investing in Roth IRA makes sense as you still haven’t reached your highest earning years and will normally be in a lower tax bracket. This means that when you put away earnings in a Roth IRA now, you will be paying lower taxes as compared to a time when you will fall in the higher tax bracket. The earlier you have money in the Roth account, the longer will these assets have the time to grow tax-free. The Rule of 72 (compound interest rule) will really come into play.

A Roth IRA will benefit you the most if you are self directed and can invest in non-traditional investments as well as traditional investments. Alternative investments can be real estate, tax liens, private companies, money lending, precious metals and much more. 97% of Americans never consider the “alternative world”. They are “financially illiterate” and follow their trusted advisors. However most advisors either are not aware of alternative investments or are forbidden to tell you because their broker dealer only has traditional investment options.

Benefits of Roth IRA

The following are just some of the benefits that you can enjoy with Roth IRA:

  • The biggest advantage of having a Roth IRA account is the tax advantages it offers. Your money grows tax-deferred and changes to TAX FREE at age 59 ½.
  • Retirement options, Roth IRAs don’t have minimum required distributions (MRDs). This allows you to pass on more inheritance to your heirs.
  • It offers young investors several options in terms of how to allocate their funds. For maximum return a combination of alternative investments and traditional investments is advised.
  • It’ll protect you against tax rate hikes.

So, start young and focus on retirement planning as well. Sowing the seeds now will reap you great benefits as you grow older.

When Should You Consider Converting to a Roth IRA

Posted by on Aug 2, 2016 in Blog | 0 comments

Everybody might have a similar idea of what they want to do post retirement, but not everyone plans the same way for it. Retirement planning is a crucial aspect and one may have several approaches. Not everyone’s retirement portfolio looks the same as some prefer making contributions to their 401K, while some will consider different kinds of investments and policies to secure their retired life. But there is another way to approach it.


You can consider converting to a Roth IRA. It has its own set of benefits and advantages that you should explore. Following are five situations when you could consider converting to a Roth IRA.


1. When you are in a Low Tax Bracket

When you are in a low tax bracket or have recently retired, you can decide to delay your Social Security benefits. Your income will be interest and dividends etc. During a period of being in a lower tax bracket you may convert all or acertain amount of your Traditional IRA to a Roth IRA.The gains in the Roth account will grow tax-deferred then change to tax FREE when the Roth Rules are met (Roth account is 5 years old and you reach the age of 59 1/2). Tax-free means tax-free to you and your heirs.

2. When You Want to Leave the Money for YourKids

If you have a significant amount of savings and feel that you won’t need the entire amount for your retirement, then it might be a good idea to consider Roth conversion. You can even gift it to your kids or grandkids. It might even be better if they are in a higher tax bracket as compared to you. This way, you can pay the taxes now and when the kids/grandkids inherit the Roth account, it is completely tax-free. It will continue to grow tax-free for the rest of their lives.


3. When your Investments are Temporarily Low

When the investments get temporarily low, like in the occasion of a recession, you can take advantage of such a temporary decline and recover the benefits later. For example, if you start your IRA at $100,000, which dropped to $50,000 due to some temporary decline, you can convert it into a Roth IRA at that point and pay income tax only on $50,000. Now, a few years later this converted Roth IRA will again be worth $100,000 but it will be completely tax-free. This way, you will have avoided paying income taxes on $50,000.


4. When you Feel that the Tax Rates will Go Up

While there is no way accurate way of estimating how and when the tax rates will fluctuate or go up, you can convert to Roth if you have any indication of the tax rates going up. If you think that the federal tax rates may vary based on who’s elected, or if there is some turbulence in the economy or any change is visible in the market that has the potential to affect the tax rates, then converting to a Roth IRA and paying taxes now will be more sensible rather than doing the same at higher rates later.


5. When you want to Lower your Estate’s Value for Tax Purposes

In most cases, the majority of estates are exempted from estate tax. However, if the estate is large enough, it would be ideal to convert to a Roth IRA during your lifetime. It’ll help in reducing the value of the estate, as you will be paying taxes now instead of later.

If you find yourself in any of these situations, then convert into Roth IRA. You won’t regret the decision as numerous benefits can be enjoyed later.