Converting a conventional IRA to a Roth, which will generate a one-time tax bill from the I.R.S., might be in order, depending upon your income. Mr. Brownell recommended that workers consider this move well before retirement to save taxes down the road.
“Roth converts may be paying lower federal income tax in their ‘cutting back’ years,” he added. Because of the tax hit with a Roth conversion, you will need to talk with your tax or financial planner, or run numbers on an online calculator, to see if it makes sense for you.
D.I.Y., or Get Help?
You can, of course, manage the transition yourself or get some professional help. Finding a fee-only certified financial planner is a good start. It’s possible to find a planner who will work for a flat fee or hourly rate. Don’t hire anyone who wants to sell you investment products.
Hands down, increasing your nest egg during your in-between time is always a good idea. For 2022, you can contribute $20,500 to your 401(k) or other defined-contribution plans. That’s $1,000 more than last year. People over 50 can add $6,500 in catch-up contributions.
More important, one of your key questions should be, “What do I truly want to do and how do I get there?” Whether you are envisioning partial or full retirement, it helps to have some specific goals. For Ms. Sterner, one of those goals is having more time to engage with her local network. “I have worked nationally and internationally my entire career,” she said. “I am finding huge enjoyment volunteering in my local community.”
Ultimately, your quality of life is the biggest factor. In Ms. Sterner’s case, that involves “managing my finances, so instead of wrangling clients I can be wrangling lake trout from my kayak.”
Article source: https://www.nytimes.com/2022/02/18/business/retirement-planning-money-social-security-medicare.html
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