A 62-year-old couple following a common Roth conversion schedule pays about $296,000 in federal tax on the conversions. When their finances are projected to age 95, they end up with less money than if they had never converted. An alternative approach uses the years between 62 and 73 differently. The couple lives off their pre-tax account in their 60s, delays Social Security until age 70, and converts only a small amount that fits within a low tax bracket. For the same couple with the same savings and spending, this approach pays about$156,000 less in lifetime federal tax. By age 95, after setting aside the tax still owed on the remaining IRA, it leaves about $367,000 more than doing nothing and about$400,000 more than the large conversion plan.

The Case Study: Jim and Nancy

The analysis uses one household throughout:

• Ages: Jim and Nancy are both 62.
• Assets: $1.8 million in 401(k)s and IRAs, plus$250,000 in a taxable brokerage account.
• Spending goal: $8,000 per month after tax.
• Social Security at full retirement age (67): Jim, $2,900 per month; Nancy,$1,700 per month.

Assumptions:

• All figures are in today's dollars.
• Investments grow at 4% per year after inflation.
• Only federal tax is counted. State taxes are excluded.

Why the Window Matters

After the final paycheck, taxable income typically falls sharply. Social Security may not have started. Required minimum distributions (RMDs) are usually years away. The start age depends on birth year:

This period, when the IRS sees little income on the tax return, is a financial asset. Most people use it without planning, for example by drawing on a brokerage account, claiming Social Security early, or allowing the pre-tax balance to grow into a larger future tax liability.

The Problem a Conversion Is Meant to Solve

Forced Withdrawals on a Growing Balance

If Jim and Nancy take no withdrawals and their $1.8 million grows at 4$3 million by age 75. The first RMD on that balance is about $122,000.

The IRS divisor that determines the RMD shrinks each year, from 24.6 at age 75 to 16 at age 85. The required share therefore rises even as the balance grows.

Forced income also stacks on other income:

• Social Security taxation: Once other income exceeds a fixed threshold that has not been adjusted for inflation, up to 85% of Social Security benefits become taxable.
• Medicare premiums (IRMAA): Premiums are based on the tax return from two years earlier. For a couple, income above $218,000 in 2026 triggers a surcharge for the entire year.
• Net investment income tax: Investment income can rise above $250,000 and become subject to an additional 3.8% tax.

The single tax figure on a form therefore produces costs in four separate places.

The Realistic Baseline: Claiming at 62 and Drawing Down the Brokerage Account

Most couples do not leave the account untouched. Under a more typical path, the couple:

1. Claims Social Security at 62, receiving $3,220 per month combined.
2. Spends the brokerage account first.
3. Begins withdrawing from the IRA around age 66, when the brokerage account is depleted.

Under this path, the IRA is about $2.26 million at age 75. The first RMD is about$95,600. After adding the taxable portion of Social Security and subtracting the standard deduction, taxable income is about $93,000. This falls within the 12$100,800 for married couples in 2026. The federal bill for that year is about $10,600.

For a married couple with $1.8 million, the tax burden at age 75 is therefore primarily a 12% bracket issue. A plan that pays 22% or 24% today to avoid 12% later requires careful justification.

The Larger Risk: The Surviving Spouse

The larger tax risk arises when one spouse dies. The household loses the smaller Social Security benefit, but the RMDs continue from the same IRA. The survivor also files as single, which halves the standard deduction and roughly halves the width of each bracket.

Using the example in which Jim dies at 85 and Nancy lives to 95 while spending about three-quarters of their joint spending:

• Year before Jim's death: The couple pays about $17,800 in federal tax.
• Year after Jim's death: Nancy, alone, pays about $25,600. Her last dollars fall in the 24% bracket, and her Medicare premium includes a surcharge because the single-filer threshold is half the married threshold.
• Over her 10 years alone, Nancy pays more federal tax than the couple paid in their first 20 years of retirement combined.

The primary risk of a large pre-tax balance is therefore not age 75. It is the survivor filing single with distributions sized for a married couple.

The Key Question

Before evaluating any conversion schedule, the relevant question is:

What tax rate will these exact dollars face if no action is taken, and who will pay it?

The relevant rate is the marginal rate on the last dollar withdrawn in a given year, not the average rate or today's rate. For Jim and Nancy, that rate is:

• 12% in their 70s
• 22% in their 80s
• 24% for the surviving spouse

This analysis shows that any conversion must be sized to a changing target. It also explains why a large conversion appears prudent: it addresses a real risk.

The Conversion Plan Tested

A common schedule for couples in this position:

• Convert $150,000 per year from the IRA to a Roth IRA, beginning at 62.
• Pay the conversion tax from the brokerage account, so the full $150,000 reaches the Roth.
• Continue claiming Social Security at 62.

By age 72, the IRA is empty. Subsequent withdrawals are tax-free, and the surviving spouse incurs no federal tax on the remaining funds. The outcome at the end of the schedule is favorable. The analysis below examines the intermediate years.

Break 1: The Conversion Rate Is Higher Than Expected

A conversion is advantageous only if today's rate is clearly lower than the rate the same dollars would face later.

• Years 1–3: Social Security and the $150,000 conversion combine. The last dollars fall in the 22$22,600 per year.
• Around age 65: The brokerage account is depleted. It has been paying both living costs and conversion tax. The couple now needs about $100,000 per year from the IRA for living expenses, in addition to the conversion.
• Result: Taxable income exceeds $250,000. The last dollars fall in the 24$45,000 per year.

The plan pays 24% to avoid 12%.

Break 2: The Tax Is Paid From the Wrong Source

Conversion tax should be paid from funds outside the IRA. Otherwise, the conversion reduces the balance it is meant to protect. In this plan, the tax was paid from the brokerage account. Funds used to pay the IRS no longer compound for the household.

By age 65, the $250,000 in flexible, already-taxed savings is gone. This account had served as the reserve for a new roof, a weak market year, or support for a child. After age 65, every such expense must be funded from the IRA as additional taxable income in years already taxed by the conversion. The plan prepaid tax and exchanged the household's most flexible dollars for its least flexible ones.

Break 3: The Medicare Surcharge Is a Cliff

The IRMAA surcharge is based on the tax return from two years earlier. If income exceeds the threshold by $1, both spouses pay the higher premium for the entire year.

A conversion at age 63 seems to have no cost because Medicare has not begun. However, income reported at 63 determines the premium at 65, the first year of Medicare coverage. Jim and Nancy crossed this threshold for six consecutive years, adding about $28,000 in surcharges. These surcharges rarely appear in the projections presented to the couple.

On its own, this cost is not decisive. It adds to the other breaks.

Scoreboard

For most of their 70s, the two paths produce similar results. From about age 82 onward, the default path pulls ahead and remains ahead.

The conversion plan prepaid a decade of tax at 22% to avoid a tax rate of 12% that would have applied for most of their lives. The one benefit appeared in the survivor years, but even then the cost exceeded the savings.

The Smaller Conversion Objection

A smaller conversion, kept within the 12% bracket, may appear to avoid these breaks. The difficulty is competition for the same bracket space.

While the brokerage account covers living expenses, the 12% bracket is open, and a small conversion fits. However, the brokerage account also pays the conversion tax and is depleted within about four years. After that, living expenses come from the IRA and fill the same 12% space the conversion was using. Additionally, the $1.8 million growing at 4$72,000 per year in taxable income on its own.

The conversion then either shrinks to almost nothing or spills into the 22% bracket. A conversion large enough to matter loses its advantage. A conversion small enough to keep its advantage has little effect.

The Alternative: Spend From the IRA and Delay Social Security

The alternative reverses both default decisions:

1. Live on the IRA in the 60s instead of the brokerage account.
2. Delay Social Security until 70 instead of claiming at 62.

How the Withdrawals Work

Withdrawing from the IRA reduces the pre-tax balance in the same way a conversion would, which lowers future RMDs. The difference is that tax is paid on money being spent, not prepaid on money moved into a Roth account.

No separate payment goes to the IRS, and the brokerage account is not drained. The withdrawal itself fills the lower brackets with funds the household needs.

Years 62 to 70

• Annual IRA withdrawal: About $104,000.
• Taxable income after the standard deduction: About $70,000.
• Annual federal tax: About $8,100, which is under 8% of the amount withdrawn.

The brokerage account remains untouched and continues to grow. It remains available for unexpected expenses.

Age 70 and Beyond

By age 70, the IRA has declined from $1.8 million to about$1.44 million in today's dollars. Social Security begins, and withdrawals fall to about $29,000 per year. The balance begins to grow again.

Between ages 70 and 74, taxable income is about $16,000 per year, so the 12% bracket remains almost empty.

Delaying Social Security

Each year past full retirement age adds about 8% to the benefit, adjusted for inflation, for the rest of the recipient's life:

• Claiming at 70 yields 124% of the full benefit.
• Claiming at 62 yields 70% of the full benefit.

For Jim and Nancy, the combined monthly benefit rises from $3,220 at age 62 to$5,704 at age 70, an increase of $2,484 per month. The increase is indexed to inflation and backed by the federal government.

The cost is eight years of IRA withdrawals that the couple would have taken under either approach.

Protection for the Surviving Spouse

When one spouse dies, the survivor keeps the larger of the two benefits:

• If Jim claimed at 62, Nancy's survivor benefit would be $2,030 per month.
• If Jim claimed at 70, Nancy's survivor benefit would be $3,596 per month.

Delaying benefits therefore reduces the IRA balance that would later produce Nancy's RMDs and increases the inflation-protected income she receives. It is the most direct protection against the single-filer tax squeeze described earlier.

The Costs of the Bridge Strategy

Psychological Cost

For eight years, the largest account declines. The balance falls from $1.8 million to$1.7 million, then to $1.6 million. It reaches a low of about$1.39 million at age 69. Each statement may appear to show failure, even though the plan operates as designed.

Friends who claimed Social Security at 62 appear wealthier on paper for many years. On a pure balance comparison, those friends remain ahead until about age 84.

Break-Even Analysis

The break-even point is an honest disclosure. If Jim and Nancy both died at 78, claiming early and leaving the IRA untouched would have left more money behind. The bridge strategy depends on a normal lifespan for both spouses and on a long life for the survivor.

The relevant question is whether the plan should be built for the most likely outcome or the outcome that would cause the most harm. For a 62-year-old couple, the probability that at least one spouse reaches 90 is about 50%. A long life is therefore the base case rather than the edge case. An early death is the edge case, and in that scenario, remaining assets pass to heirs. This outcome is a smaller problem than a surviving spouse running short of funds at 91.

Refined Version: A Small Conversion Within the 12% Bracket

The bridge strategy leaves one opportunity unused. Years 70 to 74, with an almost empty 12% bracket, represent wasted capacity. A small conversion uses that capacity.

The refined plan:

1. Live on the IRA from 62 to 70.
2. Delay Social Security until the RMD start age.
3. Each year, convert the amount that fills the top of the 12% bracket, and no more.

Withdrawals cover spending. Conversions use the remaining space in the low bracket.

For Jim and Nancy:

• Annual conversions: About $25,000 to$39,000.
• Taxable income: Held at $100,800, the top of the 12% bracket, every year.
• Annual federal tax: About $11,600 per year from age 62 through 74.

At age 75, the IRA is about $944,000, and a Roth IRA of about$538,000 sits alongside it. The first RMD is about $40,000, less than half the amount under the default path. With Social Security included, federal tax that year is about$3,800.

Comparison for the Surviving Spouse

Under the refined plan:

• RMDs for the survivor are smaller.
• The survivor's Social Security benefit is larger.
• Federal tax in the year after Jim's death is about $11,200, compared with$25,600 under the default path.
• Nancy's last dollars fall in the 22% bracket instead of 24%.
• No Medicare surcharge applies.

The survivor problem did not require a larger survivor check. It required a smaller IRA and a larger Social Security benefit.

Lifetime Results

The refined plan saves about $156,000 in lifetime federal tax. It involves no separate payment to the IRS in any year and no Medicare surcharge in any year.

The refined plan pulls ahead of the default path around age 81. It pulls ahead of the large conversion plan at about the same age. The bridge alone crosses around age 84.

Summary of the Principle

Spend from the account you want to become smaller. Delay the benefit you want to become larger. Convert only the bracket room that spending leaves empty.

The mistake in the large conversion was not the Roth account itself. The mistake was paying for the future with the wrong dollars, at the wrong rate, in the wrong years. The mistake in the default path was spending the lowest-tax years on money that had already been taxed.

Additional Tools for Low-Income Years

Long-Term Capital Gains at 0%

In low-income years, long-term capital gains may be taxed at 0% up to $98,900 of taxable income for a married couple in 2026. This rate is useful for reducing a concentrated stock position at low cost.

Capital gains stack on top of ordinary income. Each dollar converted therefore uses one dollar of the 0% capital gains space. In a year when the household plans to sell a large position, it may be better to convert less or none and allow the gains to use the room.

This is a year-by-year decision, not a fixed schedule.

Qualified Charitable Distributions

Beginning at age 70½, a qualified charitable distribution (QCD) sends money directly from the IRA to a charity. In 2026, the limit is $111,000 per person. The amount is excluded from taxable income and counts toward RMDs once they begin.

For households that give to charity, making gifts from the IRA rather than a checking account reduces taxable income.

Health Insurance Between 62 and 65

Households that retire at 62 and purchase their own health insurance face a different constraint. Premium subsidies depend on income. For 2027 coverage, the subsidy ends entirely for a couple with income above about $86,500. An IRA withdrawal of$104,000 exceeds that threshold. For a couple in their early 60s, the extra premiums can exceed $20,000 per year.

For the years between 62 and 65, the sequence changes:

• Spend more from the brokerage account and less from the IRA.
• Keep income below the subsidy threshold.
• Begin the heavy IRA drawdown in the year Medicare coverage starts.

Risks of the Bridge Strategy

The bridge strategy requires the portfolio to fund the entire household budget for eight years without Social Security. If the market falls 25% in the first year, the household must sell shares at depressed prices to cover the same $8,000 per month. Each share sold at a low price cannot participate in the subsequent recovery.

Portfolios are often built for growth during working years. They are not always structured to pay household expenses for multiple consecutive years. The most significant risk is therefore not the balance itself but the sequence of returns and the source of funds during the years before age 70.

A bridge reserve, sized to cover the years between the last paycheck and the Social Security start date, can reduce this risk. Stress testing the bridge is the first step for anyone within 10 years of retirement whose assets are mostly pre-tax.

When a Large Conversion Still Makes Sense

Some situations justify conversions above the bridge-strategy level.

Large Pre-Tax Balances

For a couple with $4 million in pre-tax accounts and higher spending:

• Spending alone fills the 12% bracket, leaving no space for conversions.
• The first RMD at age 75 is about $170,000, even after the bridge.
• A surviving spouse's last dollars fall in the 35% bracket.

At this scale, converting at 22% or 24% during the bridge years means paying 24% to avoid 35%. This differential is large enough that spending alone cannot outpace the resulting growth.

Income That Fills the 60s

Some households have no low-income window. Examples include a pension starting at 60, deferred compensation payments, a spouse who continues working, or the sale of a business. Without a low-income window, the strategy has little room to operate. The decision then reduces to comparing today's rate with the future rate, dollar by dollar.

Heirs

Most non-spouse beneficiaries who inherit an IRA must empty it within 10 years. If the owner had already begun RMDs, the beneficiary must also take annual distributions during that period. Such distributions often occur during the beneficiary's peak earning years and highest tax bracket. Converting at 22% or 24% to avoid a 35% rate for a child can be advantageous if the decision is deliberate.

Health and Spousal Differences

If one spouse is likely to file as single within a decade, the survivor's brackets become a probable outcome rather than a hypothetical. In that case, paying tax at married rates in advance is a defensible choice.

Expectations About Future Tax Rates

Some households expect tax rates to rise. The brackets in effect today were made permanent in 2025. In tax law, "permanent" means until Congress changes the law. A household that values certainty over optimization may find value in converting, even though the benefit does not appear in a financial projection. Converting for certainty is not the highest-return strategy for most families, but it is a legitimate reason.

Smaller Estates

Consider a household with $800,000 in pre-tax accounts,$150,000 in other savings, and spending of $6,000 per month. RMDs are small under any approach, and tax liability is low on every path. The conversion decision has little effect.

The timing of Social Security remains significant. Living off the IRA and claiming at 70 leaves about $1.05 million at age 95. Claiming at 62 leaves about$822,000. For most households, the timing of benefits is the more important decision, and the conversion is a minor adjustment.

Three Numbers to Calculate

Before committing to a multi-year conversion schedule, calculate the following:

1. Projected first RMD at age 73 or 75, depending on birth year, including Social Security income. This figure measures the size of the tax problem.
2. Projected survivor RMD, using the same calculation with filing status as single. This figure measures the size of the problem for the surviving spouse.
3. Years between the last paycheck and the start of Social Security. This window is the central asset of the strategy. Claiming early closes it.

Also compare two rates:

• The marginal rate on the last dollar converted this year.
• The marginal rate that same dollar would face as a future RMD.

If the gap is less than about five percentage points, the break-even period is likely too long to justify conversion.

Warning Signs in a Proposed Plan

A conversion schedule that does not include these three numbers was assumed rather than modeled. Three warning signs warrant scrutiny:

1. The tax is paid from the only flexible savings.
2. The schedule runs through Medicare look-back years without addressing IRMAA surcharges.
3. Social Security is claimed early in a plan presented as tax optimization.

Any single item may be acceptable. All three together usually indicate that the plan began with a conclusion, such as maximizing conversions, and worked backward. Sales incentives may also favor this outcome, because a Roth account funded with a large conversion is a product that can be presented in client meetings.

Additional Considerations

• State taxes: Households that plan to move from a high-income-tax state to a state with no income tax may defer conversions until after the move.
• Market returns: The analysis uses 4% after-inflation growth throughout. A weak decade in the 60s makes the bridge cheaper in tax terms but more difficult to sustain financially. Any plan is a projection and should be rerun with actual balances.
• Annual review: Income determines Medicare premiums, so each year's income should be checked against IRMAA thresholds.
• Annual decisions: The strategy does not require a fixed multi-year conversion schedule. Each year's conversion should be decided using current figures.

Conclusion

The cost of a dollar of retirement income is determined by the marginal tax rate on the last dollar withdrawn in the year it is taken. The strategies in this analysis lower that rate, either by shifting income to lower-tax years or by directing income to sources that receive more favorable tax treatment or stronger protection.

These steps reinforce one another:

• Spending from the IRA in the 60s reduces the IRA balance.
• A smaller IRA produces smaller RMDs.
• Smaller RMDs keep income below the Medicare surcharge thresholds and reduce the survivor's tax exposure.
• Lower tax exposure makes it feasible to delay Social Security.
• A larger Social Security benefit reduces the amount needed from the IRA later.

The result is a sequence that improves each year. Many households approach their 60s differently. They make few tax decisions because no decision appears urgent, and they spend their 70s and 80s responding to tax notices.

The households that achieve better results are not necessarily more knowledgeable. They ask a different question earlier: not how to avoid tax permanently, but which year is the least expensive to pay it. Answering that question requires a projection, an annual review, and consistent updates. It does not require a complex product or a single large transaction.

The plan works only when its figures are updated each year. Spending, market performance, bracket thresholds, health, and family circumstances all change. A plan that was appropriate at 62 may require revision at 66. The annual review remains necessary.

Applied to Jim and Nancy, the analysis shows the following. Starting at 62 with $1.8 million, the most common approach would require a$296,000 tax payment and leave them with less at 95 than doing nothing. Using the years from 62 to 73 as the lowest-tax years of their lives, with the sequence described above, produces about $367,000 more than doing nothing by age 95.