Sample client recommendations.
Backdoor Roth IRA Conversion Strategy
Open a Backdoor Roth IRA: If your income exceeds the limits for direct Roth IRA contributions, consider using the Backdoor Roth IRA strategy. Contribute to a traditional IRA and then immediately convert it to a Roth IRA for tax-free growth and withdrawals in retirement.
Example: David, a 45-year-old executive earning $250,000 annually, contributes $7,500 (2026 limit) to a traditional IRA, making sure not to take a tax deduction. He then immediately converts this amount to his Roth IRA. By doing this annually for 20 years until retirement, assuming a 7% annual return, David accumulates over $260,000 in his Roth IRA, all of which can be withdrawn tax-free in retirement.
Social Security Benefit Strategy Consideration
Develop a Social Security strategy: Create a plan to take advantage of your Social Security benefits. Consider factors such as your full retirement age, spousal benefits, and the potential for delayed claiming to increase your lifetime benefits.
Example: Maria and John, both 62, develop a strategy where John (the higher earner with a full retirement age benefit of $2,800) delays claiming until 70 to maximize his benefit to $3,700 monthly. Maria, with a full retirement age benefit of $2,000, claims at 66 (her full retirement age) to provide some income. When John claims at 70, Maria switches to a spousal benefit of $1,400 if it's higher than her own. This strategy could increase their lifetime benefits by over $100,000 compared to both claiming at 62, providing them with more financial security throughout their retirement.