Should we pay the mortgage off

[Sandy & Shirley]

The other thing to remember about Roth Conversions is to try to do them before the year you turn 63.

The year you turn 65 and apply for Medicare, they will look back two tax years, the year you turn 63, to determine your MAGI, Modified Adjusted Gross Income, and they will then use this number to determine your Medicare premium. Each year after that they will continue to look back two tax years to determine your premium for the next year.

 

[lemming]

Thank you all for your thoughts and suggestions. Very helpful indeed. I talked it over with DW. We agreed to stop plowing money into the market for a while and instead apply all excess cash flows to extinguish our mortgage.

The beauty of that decision is you can be flexible. Spend one months excess on things you need/want outside your budget. Or put some in market when you see a buying opportunity. And all the excess dollars go to pay down the principal so that you are "years" ahead on the amortization schedule. Every regular payment applies more to the principal then if you had not doubled up.

 

[COcheesehead]

The other thing to remember about Roth Conversions is to try to do them before the year you turn 63.

The year you turn 65 and apply for Medicare, they will look back two tax years, the year you turn 63, to determine your MAGI, Modified Adjusted Gross Income, and they will then use this number to determine your Medicare premium. Each year after that they will continue to look back two tax years to determine your premium for the next year.

That's great advice. I am going to try and pull off my conversions when I am 59/60.

 

[pb4uski]

The other thing to remember about Roth Conversions is to try to do them before the year you turn 63.

The year you turn 65 and apply for Medicare, they will look back two tax years, the year you turn 63, to determine your MAGI, Modified Adjusted Gross Income, and they will then use this number to determine your Medicare premium. Each year after that they will continue to look back two tax years to determine your premium for the next year.

Base premium is for AGI of $170k or less for MFJ. Assuming standard deduction of $24k, that would put you in the 22% tax bracket. So if like many here, you convert to the top of the 12% tax bracket, then you don't need to worry about this.

If you convert to the top of the 22% tax bracket, then you'll have to pay an additional $53.50/mo for Medicare Part B and $13/mo for Medicare Part D... so worst case a total of $798/year.... still your future tax savings on those additional Roth conversions might easily exceed $798 so while it is a factor to consider, additional Roth conversions may still be worthwhile. YMMV.

 

[Sandy & Shirley]

One of the biggest problems when posting on any site that deals with income levels is that those levels change drastically depending on where you live. Here is an image of the first and last 3 lines of a chart created by Business Insider based on the median income numbers from the US Census Bureau's 2013 American Community Survey.

The full chart is viewable here:
https://amp.businessinsider.com/images/551b2426eab8ea6d3c285bd1-1136-2338.jpg

Median Household Income varies from $37,963 to $72,483 depending on what state you live in and this changes the range of “middle class” income. The $37,963 state has a “middle class” defined as earning from $25,309 to $75,926, while the $72,483 state has a “middle class” defined as earning from $48,322 to $144,966.

We are from Maryland, so we consider an average income to be $40,000 to $60,000 for an individual and $100,000 for a couple.