At 84 With $8M Saved, Are Roth Conversions Still Worth It?
An 84-year-old and his 77-year-old wife wonder if Roth conversions make sense with $8M saved and a reluctance to pay steep adviser fees.
An 84-year-old retiree with $8 million in savings is questioning whether Roth conversions still make financial sense at his age — and whether paying a financial adviser 2% of assets, roughly $160,000 annually, is worth the cost. The question, raised in a MarketWatch reader column, cuts to the heart of a dilemma facing many high-net-worth retirees: at what point does the tax strategy of converting traditional retirement funds into Roth accounts stop paying off?
Roth conversions are typically pitched as a long-term tax optimization tool. By paying taxes now on pre-tax retirement funds, savers can shield future growth from taxation and potentially reduce the tax burden on heirs. But the calculus changes significantly in one's 80s, when the investment horizon shortens and the immediate tax hit of a large conversion may outweigh the future benefit.
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For a couple in their late 70s and 80s holding $8 million, required minimum distributions loom as a major factor. The IRS mandates withdrawals from traditional retirement accounts starting at age 73, and those distributions push taxable income higher each year — making Roth conversions either more urgent or more expensive depending on current bracket exposure. At this asset level, the couple almost certainly faces top marginal rates.
The adviser fee concern adds another layer of complexity. A 2% annual fee on an $8 million portfolio amounts to $160,000 per year — a figure that can meaningfully erode returns and compound over time. Many fee-only fiduciary planners charge flat fees or hourly rates that could represent significant savings for a couple at this wealth level, making it worth shopping for alternatives before committing to a percentage-based arrangement.
Whether Roth conversions are right at 84 ultimately depends on estate planning goals, heir tax situations, and current income — factors that demand personalized analysis rather than a one-size-fits-all answer. Continue reading at MarketWatch.com
