Jill (not an actual client, but similar to one) was successful at a Silicon Valley technology company, and retired at age 55 with a $5 million IRA.
Our Service: We want to manage Jill’s assets prudently, and help her to avoid the two pirates of wealth: inflation and taxes. To counter inflation, we create an asset allocation with sufficient equities (invested in low-cost domestic and international equity index funds). For taxes, we have a window of opportunity to do Roth conversions while she has lower annual income, until the age of 70 (when Social Security starts) and 72 (when Required Minimum Distributions will create taxable income). We model Jill’s tax return in detail, for current and future years, to determine whether her tax rate is likely to be lower now or lower in retirement (knowing, of course, that Congress or the California legislature may change the law at any time!). If the tax rate is likely to be lower now than in retirement, we find the optimal amount of IRA assets to convert to a Roth IRA each year.
The Impact: Jill saves money in taxes by converting her IRA to Roth when it’s most advantageous to her.
(Note: This is similar to a real situation, but Jill is not an actual client. This description is hypothetical and for illustrative purposes only. This is not an endorsement or statement of client experience.)