From Yahoo Finance: 2025-03-23 08:30:00

A couple in their early 60s reviews their retirement savings together. SmartAsset and Yahoo Finance may earn commission through links. By your early 60s, attention to finances is crucial, including decisions on investment structure, risk tolerance, income needs, and tax planning. Consider switching to a Roth portfolio to potentially save on taxes in retirement.

For working households with existing savings, options include contributing to a Roth account or converting a pre-tax 401(k) into a Roth portfolio entirely. Pivoting contributions means diverting savings to a Roth portfolio, considering the limits on Roth IRA contributions. Roth conversion involves moving money from a pre-tax account to a Roth IRA.

Having a Roth account means paying income taxes on money before it goes in. By 59 ½, no income taxes are paid on withdrawals. Roth accounts avoid required minimum distributions and allow untaxed returns over time. Roth contributions are valuable if you pay less taxes now than in retirement, while pre-tax accounts are beneficial if you pay higher taxes currently.

A husband and wife in their early 60s consider the value of pre-tax accounts vs. Roth accounts with $1.6 million in 401(k)s. The decision depends on expected taxes in retirement and current tax rates. Roth accounts are more valuable as they grow over time and may benefit those with lower current tax rates.

For households approaching retirement, Roth contributions are most valuable if you pay less in taxes now than in retirement. Seek a financial advisor to help with retirement planning and managing Roth accounts. Consider different Roth IRA providers for services and guidance. An emergency fund should be kept liquid for unexpected expenses.



Read more at Yahoo Finance: We’re 62 With $1.6 Million in 401(k)s. Is It Time to Switch to Roth Contributions?