Jill on Money with Jill Schlesinger

Episode: Should I Convert My Traditional IRAs to Roth?
Date: September 23, 2025
Host: Jill Schlesinger, CFP®

Episode Overview

In this episode, Jill Schlesinger tackles a listener's nuanced question about whether to convert traditional IRAs to Roth IRAs, focusing on the interplay between tax planning, retirement timing, and overall personal finance strategy. The discussion highlights the real-world decisions facing pre-retirees and underscores Jill’s signature “no-nonsense, jargon-free” approach.

Key Discussion Points & Insights

1. Listener Profile & Financial Overview (07:13–13:48)

• Caller Mark from Minnesota shares his snapshot:
  • He’s 61, wife is 64.
  • Retirement savings: $1.7 million in total, broken down as $650k in Roth accounts, $200k in traditional IRA, regular annual contributions ($31,500 into his Roth 401k; wife contributing ~$12,000/year to her traditional retirement plan).
  • Non-retirement assets: $70k in company stock, $10k brokerage, $20k cash.
  • Real estate: Owns three homes: a primary residence ($450k with $30k left on the mortgage), a $350k cabin, and a $60k Airbnb “hunting house”—all with no or minimal debt.
  • Income: $220k household income.
  • Retirement timeline: He plans to work 6 more years; his wife, 3 more. Both hope to start drawing Social Security at 67.
  • Social Security expectation: Combined $60k/year.
  • Lifestyle needs: ~$7,500–8,000/month spending.

2. Social Security Timing: 67 vs. 70 (11:24–15:18)

• Jill quickly addresses popular advice on Social Security claiming ages, emphasizing that waiting until 70 yields a guaranteed 8%/year increase in benefits after full retirement age.
• She pushes back on industry “trends” that argue it's smarter to take early and invest the difference. “That is comparing a guaranteed 8% increase with an at-risk 12 or 13% possibility. …I know the difference between a guarantee and assuming risk to get something.” (13:04)
• Jill acknowledges that Mark and his wife are financially secure and could claim at 67, but she reminds listeners the math strongly supports delaying if health and life expectancy allow.

3. Converting Traditional IRA to Roth – Strategy & Tax Considerations (16:08–21:16)

• Mark’s main question: Should he start converting his and his wife’s $200k traditional IRA balance to Roth now?
  • Jill’s assessment: Not necessary.
    • Their relatively limited after-tax (non-retirement) savings makes large conversions less appealing.
    • Instead, she suggests optimizing incoming contributions:
      • For Mark’s wife: Contribute only up to employer match in her traditional plan. Put any additional retirement savings into a taxable brokerage account to boost liquidity.
    • Recommended plan:
      • Once the wife retires, begin small, methodical distributions from the traditional IRA (“dribble it out”) to control and smooth out the tax liability before required minimum distributions (RMDs) kick in.
      • This essentially “pre-pays” taxes while keeping the couple in the more moderate (likely 22%) tax bracket.
    • Jill's perspective:
      “I would wait until she retired …pull some of the money out, pay the tax …stay in the same tax bracket that you're in.” (17:28)

4. Tax Bracket Realities & Liquidity Planning (21:16–23:19)

• Mark asks if, once retired and living mostly on Social Security, they’ll “magically fall into the 12% taxable income bracket.”
  • Jill’s answer: No “magic.” Because their RMDs from large pre-tax retirement balances will push total taxable income into the 22% bracket, even after Social Security.
    • “If we do nothing with those accounts …by the time you're starting RMDs …the government's going to say you have to take 80 grand out a year. 80 plus 60 is 140. You're in the 22% tax bracket. Got it.” (22:44)
  • The upshot: Proactively pulling money gradually out of traditional accounts gives them more control over timing and prevents getting pushed into higher brackets later due to IRS RMD rules.

5. Estate Planning & Listener Appreciation (23:19–End)

• Jill double-checks that Mark and his wife have estate documents in place—which they do.
• Warm appreciation for the listener community, a callback to earlier charity ride gratitude, and classic Jill encouragement to “lift someone up.”

Notable Quotes & Memorable Moments

• On Social Security trends:
  “The only reason that I would just caution against thinking like that is that is comparing a guaranteed 8% increase with an at risk 12 or 13% possibility.” — Jill, (13:04)
• On Mark’s Airbnb house:
  “My wife refers to it as Baltic Avenue, the Monopoly.” — Mark, (09:46)
• Caller praise:
  “There's financial investors versus financial retirement splainers. And you're a good splainer.” — Mark, (14:01)
• Jill’s core Roth conversion advice:
  “For your initial question, should you convert that 200? I say no, but I would have your wife pull back on the amount of money she's adding to … just up to the match. Put the balance into the brokerage account. Live your life, have fun. Go Vikings.” — Jill, (20:32)
• Tax bracket warning:
  “All I’m suggesting is let’s get that 22% money out right now. Let’s control it. Let’s do it very methodically so … you’re not being controlled by it.” — Jill, (23:09)

Important Timestamps

• Charity ride recap and gratitude: 02:00–07:13
• Listener Mark’s full financial picture: 07:13–13:48
• Discussing Social Security strategy & advisor mindsets: 11:24–15:18
• IRA/Roth conversion strategy: 16:08–21:16
• Tax bracket expectations & RMD discussion: 21:16–23:19
• Estate planning check & episode wrap-up: 23:19–End

Final Takeaways

• No blanket ROTH conversions: For Mark and wife’s situation, skip lump-sum Roth conversion and instead prioritize higher after-tax liquidity and gentle, planned IRA distributions post-retirement.
• Stretch your tax planning: Gradual withdrawals before RMD age help keep taxes manageable.
• Think in real, not magical, tax brackets: Social Security and required IRA withdrawals combine to push many retirees above the lowest brackets.
• Enjoy your financial well-being: As Jill teased, “Live your life, have fun. Go Vikings.”

For more personal finance questions or to be a caller, visit JillOnMoney.com.