Are We Too Old for Roth Conversions With an $8 Million Nest Egg?
- An 84-year-old retired husband and his 77-year-old wife hold approximately $8 million in traditional IRAs but are hesitating to execute Roth conversions or pay a 2% annual asset...
- Annual income for the couple stems from Social Security, required minimum distributions, and monthly pensions from previous employers that total about $2,200 per month, according to the MarketWatch...
- The readers noted that they employ a certified public accountant primarily for tax preparation.
An 84-year-old retired husband and his 77-year-old wife hold approximately $8 million in traditional IRAs but are hesitating to execute Roth conversions or pay a 2% annual asset management fee to a financial adviser, according to correspondence published by MarketWatch.
The couple, who are both fully retired, detailed their financial standing in a letter to MarketWatch columnist Quentin Fottrell. According to the published query, the pair stated, We are reluctant to pay a financial adviser 2% of assets — roughly $160,000 per year.
Their combined portfolio sits at roughly $8 million, housed primarily across separate traditional individual retirement accounts in both of their names.
Portfolio Structure and Annual Expenses
Annual income for the couple stems from Social Security, required minimum distributions, and monthly pensions from previous employers that total about $2,200 per month, according to the MarketWatch report. Their largest routine expenditures consist of required minimum distribution-related taxes and annual real-estate taxes, which together cost approximately $7,000 annually. The couple reported that their minor healthcare expenses are covered entirely by Medicare and Medigap policies. After paying taxes, they reinvest about half of their required minimum distributions into a taxable brokerage account. The other half is deposited into a bank account used for routine living expenses, which typically maintains a balance of around $45,000, according to the published correspondence.
Past Investment Experience Shapes Advisory Hesitance
The readers noted that they employ a certified public accountant primarily for tax preparation. Their aversion to traditional wealth management stems from an experience years ago when they handed a major bank $20,000 to invest independently. After losing half that sum—$10,000—within a four-month span, they reclaimed control of their funds. While they previously believed that a Roth conversion required paying taxes upon withdrawal from a traditional IRA and subsequently paying taxes again upon contributing to a Roth, they discovered that tax mechanics operate differently. Even so, they questioned the financial logic of pursuing conversions at their advanced ages, citing mixed family longevity history where male predecessors died relatively young while female relatives often reached their 90s. Rather than paying a percentage fee for ongoing portfolio oversight, the couple indicated an interest in paying a qualified professional for objective, periodic advice regarding tax strategies and estate planning. In response, MarketWatch advised that while a Roth conversion may no longer serve as an immediate tax-saving tool at age 84, it could retain value as an estate-planning instrument for high-earning beneficiaries, while emphasizing the importance of planning for a surviving spouse.
