A lot of people spend their 50s and early 60s focused on one thing: saving as much as possible for retirement.
Then retirement finally gets close, and the conversation shifts.
Now the question becomes: How do we keep more of what we've saved?
That’s where Roth conversions often enter the picture. But here’s the part many retirees miss: there’s a relatively short period of time where Roth conversions can potentially be far more valuable than they’ll ever be again.
Once Required Minimum Distributions (RMDs) begin at age 73, that window starts to close quickly.
We see this all the time with pre-retirees who did a great job building their nest egg but never had a clear strategy for how withdrawals, taxes, Social Security, and Medicare all work together. The old accumulation-first mindset was built for a different world. Retirement today requires distribution planning.
And the truth is, the years between retirement and age 73 may be some of the most important tax planning years of your life.
Why the Years Before 73 Matter So Much
Let’s start with the basics.
Traditional IRAs and 401(k)s were built around tax deferral. You received a tax deduction when you contributed, your investments grew tax-deferred, and eventually the IRS wants its share.
That’s where Required Minimum Distributions come in. Starting at age 73 under current law, the IRS requires you to begin withdrawing a certain percentage from most pre-tax retirement accounts each year. Those withdrawals are taxed as ordinary income.
For many retirees, those RMDs can be surprisingly large. Picture a couple in their early 60s with $2 million spread across traditional IRAs and old 401(k)s. If those accounts continue growing for another decade, they could easily face six-figure RMDs later in retirement.
That can create a ripple effect:
- Higher taxable income
- More of Social Security becoming taxable
- Increased Medicare premiums through IRMAA surcharges
- Less flexibility for future tax planning
- Larger lifetime tax bills paid to Uncle Sam
The issue is not just the RMD itself. It’s the chain reaction it creates.
The “Gap Years” Many Retirees Overlook
The most overlooked Roth conversion opportunity often happens during what we call the retirement transition years
- RMDs begin at 73
- Social Security fully starts
- Pension income begins
- Large taxable withdrawals become necessary
In many cases, income temporarily drops during this period.
That lower-income window can create an opportunity to move money from pre-tax accounts into a Roth IRA at potentially lower tax rates than you may face later.
Here’s a simplified example. A married couple retires at 63. They delay Social Security until 70 and live primarily from brokerage accounts and cash reserves during the early years of retirement.
Because they no longer have employment income, they may temporarily fall into a lower tax bracket. That creates room to intentionally convert portions of their IRA into a Roth each year while managing their overall tax exposure.
Instead of waiting for the IRS to force large withdrawals later, they proactively control how and when taxes are paid.
That flexibility matters.
Why Roth Conversions Are About More Than Taxes Today
A lot of articles reduce Roth conversions to a simple question:
“Will your tax rate be higher later?”
That’s part of the equation, but it’s not the full picture.
Good Roth conversion planning is really about creating future flexibility.
Money inside a Roth IRA grows tax-free if rules are met. Qualified withdrawals are generally tax-free. Roth IRAs also are not subject to lifetime RMDs for the original owner under current law.
That can potentially help retirees:
- Manage taxable income later in retirement
- Reduce future RMD pressure
- Create more control over Medicare premium thresholds
- Leave more tax-efficient assets to heirs
- Improve long-term retirement income flexibility
Retirement is not just about how much you've saved. It's about how long it'll last and how efficiently you draw from different account types over time. The order matters.
Why Waiting Too Long Can Limit Your Options
Many people assume they can “deal with taxes later.”
Unfortunately, later is often when planning flexibility disappears.
Once Social Security, pensions, and RMDs are all active simultaneously, taxable income can stack quickly. That can make Roth conversions much more expensive than they would have been just a few years earlier.
We sometimes meet retirees at age 74 or 75 who say: “I wish someone had shown us this five years ago.”
At that point, the accounts may already be generating large mandatory withdrawals. The opportunity to gradually shift money at lower rates has narrowed significantly.
That doesn’t mean planning stops after 73. It just means the strategy becomes more constrained.
This Is Where Coordination Matters
One of the biggest mistakes we see is treating Roth conversions like a one-time investment move instead of part of a larger retirement income strategy.
A Roth conversion affects:
- Your tax return
- Medicare premiums
- Social Security taxation
- Investment allocation
- Cash flow planning
- Estate planning
Everything is connected. That’s why cookie-cutter advice can create problems. For example, converting “up to the top of the 24% bracket” might sound simple online. But if that pushes someone into higher Medicare premiums two years later, the math changes. If it creates a larger capital gains issue or impacts ACA subsidies before Medicare eligibility, that matters too.
Personalized planning becomes critical here.
The Best Roth Conversion Strategies Are Usually Gradual
Many retirees assume Roth conversions need to happen all at once.
In reality, the most effective approach is often systematic and measured.
Rather than converting a massive amount in one year, many households benefit from a multi-year strategy that gradually fills lower tax brackets overtime.
That can potentially:
- Spread tax liability across multiple years
- Reduce bracket spikes
- Maintain more predictable income levels
- Create better long-term tax diversification
Think of it less like flipping a switch and more like adjusting a dial carefully over several years. That’s especially important when coordinating retirement withdrawals through different phases of life. Roth assets can play an important role in a “Later Money” bucket because they may provide tax flexibility later in retirement when other income sources become less predictable.
Not Everyone Should Do Roth Conversions
This is important. Roth conversions are not automatically right for everyone.
There are situations where converting may not make sense:
- You expect significantly lower future tax rates
- You need the IRA funds immediately for spending
- The conversion creates an unnecessary tax burden
- Your estate or charitable goals point toward different strategies
Every situation is different. Tax laws can also change over time. That’s why we believe Roth conversion decisions should be part of a broader retirement income plan, not a standalone tactic pulled from a headline or YouTube clip.
The Opportunity Is Often Smaller Than People Think
The key takeaway is simple:
Most retirees have a limited window between the end of their working years and age 73 where proactive tax planning opportunities may be especially valuable.
Miss that window, and future planning flexibility can narrow quickly.
Used thoughtfully, Roth conversions can potentially help create more clarity and confidence around retirement income, future taxes, and long-term financial flexibility. But timing matters, coordination matters, and personalization matters.
If you're wondering whether this type of planning could apply to your situation, let’s talk. No pressure. Schedule an initial consultation today!
Colorado Wealth Group (“CWG”) is a financial services group offering investment advisory services through Savvy Advisors,Inc. (“Savvy”). Savvy is an investment advisor registered with theSecurities and Exchange Commission (“SEC”). CWG is not a separately registered investment advisor.
