Episode 102: Roth Conversions, Portfolio Diversification And Pension Lump Decisions?

Today’s Prep:

We cover one of David’s favorite topics while answering three questions from the mailbag today. From Roth conversions, investment choices, and pension decisions, we’ve got you covered when it comes to retirement planning.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Is there a bad time to do a Roth conversion? Or is always a good time to do a Roth conversion? On this episode of Cover Your Asset KC, David answers three questions from the mailbag.

Everett is wondering if it’s a bad idea to do a Roth conversion if he has a high income. What’s the determining factor on whether or not to do a Roth conversion? Consider your tax bracket, this year and your expected bracket in the future. When’s the sweet spot to do a Roth conversion? Where do you think taxes will be in the future?

Lisa wants to know what David thinks about investments, such as annuities or hedge funds, that require you to lock your money up for a certain period of time. Different investments can work together to build the retirement portfolio for you. So instead of saying certain investments are bad or good, consider whether it fits for you within your overall plan. Are you getting the right amount of diversification?

Bill is retiring next year with a pension from his company. Should he take the monthly income or lump-sum payment? How does he decide? David shares what some of his clients have decided. Do you understand all of the pros and cons of each choice? Which one will serve you and your family best in retirement?

If you have a question for David be sure to reach out! Listen to the entire episode or click on the timestamps below to skip to a particular question.

[0:58] – Happy Thanksgiving!

[2:31] – Mailbag: Is it a bad idea to do a Roth conversion on a high income?

[7:50] – What would be considered “high income”?

[9:36] – Mailbag: What do you think about investments that require you to keep your money locked in?

[13:13] – Mailbag: Should you take a monthly income or lump-sum for your pension?

Today’s Takeaway:

“There are opportunities for you, especially if you are an early retiree (hopefully before 2026) to do some Roth conversions–probably a series of them over years–that can make a lot of sense for you and your family from a tax standpoint.”

– David Dickens

Additional Resources:

PODCAST: End-of-Year Financial Planning

PODCAST: Can You Pass This Social Security Quiz? 

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More From David:

The host: David Dickens

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