I'm living on cash and doing partial Roth conversion to get my TIRA down to about 500K. 500K will grow slow enough to keep me in the 12% (or 15%) ordinary income bracket when added to SS for 15 years or more, and cap gains from my brokerage sales will be zero. So I'll live on SS, RMD, brokerage up to the top of zero cap gains and add a little dab of Roth money and my taxes will be based on SS + a small RMD ordinary income. The bulk of my wealth will be in Roth and brokerage, paid out tax free. My conversions are at a rate that converts enough to get me down to 500K TIRA, but optimizes IRMAA and taxes over the course of 5 (now 7) years.
I won't hit the Roth very hard and let it grow as end of life insurance, and later as inheritance if any is left. If I get a big medical bill or something I'll spend down the TIRA if the amount reaches the tax free threshold else I'll spend down the Roth as needed for something like 24/7 memory care or the occasional new car.
The chances of Alzin are 1/10 at 60 but 1/3 at 85 so that gives the Roth 25 years to compound relatively unmolested and free from SORR since I'm not withdrawing from it, as the risk of needing it continually increases in old age. I think the added hedge for end of life care is worth the Roth conversion hassle for the opportunity to compound an extra 25 years completely tax free. I've already converted 80% for this year and I'll convert the rest in Dec. If the market crashes I will still convert the same cash amount. In other words if my conversion is 100K/yr and my portfolio is 2M and the market falls in half I'll still convert 100K because the effect is I can transfer more property for the same tax dollar. 100k/2M = a 5% conversion at say an $8500 tax bill but if the market dumps in half my conversion will be 100K/1M or a 10% property transfer for the same $8500 tax bill. I'm also converting my riskiest assets first and leaving my less risky assets in the TIRA for later conversion, over the years of conversion. This way if the market does well (as it has done), the riskiest assets are already in the Roth compounding tax free and the less risky assets are compounding at a slower rate and thus generating a smaller overall tax load when they do get called up in the que for conversion.
One you make a plan, Roth conversion is a 10 minute per year proposition. Hardly constitutes any hassle. I've been pulling money out of the brokerage to turn into cash to live on, on a buy low sell high basis and I've been writing off those taxes using tax loss harvest from 2000 and 2008 crashes. I'm letting SS ride to age 70 to get the max compounding on that annuity till I pull the trigger. so during conversion I'm living off sales of brokerage stock + cash loss harvest (essentially using the brokerage as a Roth) and upon pulling the trigger on SS and RMD my income will be SS + a small RMD for a small tax bill, some brokerage at 0% cap gain to fill in the cracks and the Roth for pin money or a new car or a big wad in case of disaster.
