The Golden Window: Roth Conversions Before Social Security & RMDs
Episode 5
The Golden Window: Roth Conversions Before Social Security & RMDs
Published on September 3rd, 2025
In Episode 5 of Retirement Tax Matters, we define the Golden Window — the critical years of temporary low income after you retire but before RMDs and Social Security begin. For high-net-worth retirees with large pre-tax IRA balances, this is an ideal time to manage what is likely your largest future tax liability. We explore how to leverage this period by executing strategic Roth conversions, transforming a future tax problem into possible lower aggregate lifetime taxes and/or a tax-free legacy for your heirs. Most importantly, we discuss how to balance this powerful strategy with your non-financial life goals by incorporating intra-year tax projections to find the remaining "room" for conversions after you've funded your other spending needs first.
Key Tax Planning Questions
Click Below To See The Answer
-
The "Golden Window" is a non-technical term we use to describe a critical period of opportunity for retirees. It's the time between when you retire and when your Social Security and Required Minimum Distributions (RMDs) begin.
During these years, a retiree often has more control over their taxable income than at any other point in their retirement. For example, a couple might choose to have the higher-earning spouse delay Social Security until age 70. To cover their living expenses, instead of pulling from a pre-tax IRA, they might strategically generate income from a taxable brokerage account, which is often taxed at lower capital gains rates. This keeps their ordinary income low and preserves room in the lower tax brackets for proactive planning, like Roth conversions.
It's also important to remember that this is not just a golden window for financial planning, but a golden window for living. We believe it's a crucial time to balance your lifestyle goals with your financial strategy. The key is to run tax projections before the end of the year to understand exactly how much "room" you have in your tax bracket, ensuring that no valuable, low-tax space goes unused.
-
It's important to remember that the full balance you see in your pre-tax Traditional IRA isn't entirely yours; a significant portion is a future liability owed to the IRS. For HNW retirees who have spent a career diligently saving into these accounts, compound interest can create a compounding tax problem. As your IRA grows, so does the amount the government will eventually claim.
Roth conversions in early retirement are so important because they are a primary tool for proactively managing that growing tax liability.
Let's consider a common scenario for a couple (David and Lisa) who have diligently saved around $5 million, with the vast majority of it in a pre-tax Traditional IRA. Without a proactive plan, their future is on a collision course with a significant "tax storm." Once they both begin taking Social Security and their Required Minimum Distributions (RMDs) start, their mandatory income will be much higher, which can easily push them into higher tax brackets and trigger significant Medicare IRMAA surcharges.
By living on their pension and funds from their taxable brokerage account, they can keep their taxable income relatively low. This creates "room" in the lower tax brackets that they can strategically fill up each year with a calculated Roth conversion, transforming what would be a complex, taxable inheritance for their children into a simple, 100% tax-free legacy.
-
That is a crucial question. It’s important to remember that this period is not just a "golden window for financial planning," but also a golden time in your life where you can do things you may not be able to 15 or 20 years from now.
Finding the right equilibrium between enjoying the retirement you've earned and being prudent with your savings is key. For those who tend to over-save, it's a reminder to not let tax planning overshadow your life goals. For those who may be overspenders, it's about building a sustainable plan. The first step is to get clear on your family goals and determine a spending level that feels both fulfilling and secure.
Whichever camp you’re in, I think the key is to run an intra-year tax projection in the fall. This allows you to see exactly how much "room" is left in your lower tax brackets after all your living expenses are accounted for. The conversation then becomes a strategic one, allowing you to make a data-driven decision about the right amount to convert (or spend!), so you can both live your desired lifestyle and optimize your financial plan for the future.
Full Episode Transcript
Adam: Good morning and welcome to Retirement Tax Matters. My name is Adam Reed, and with me is Garrett Crawford, our resident CFP and expert who helps us understand different topics and navigate various financial matters. If you've been following us on YouTube, that's where we first started, but you can also find us on Spotify, Apple Music, and Amazon Music. I think we're literally everywhere.
Adam: I've been hearing this term, "the golden window," and we were talking about it the other day. For some of our high-net-worth listeners and clients, what is the golden window? What does it mean? Is it something people need to be aware of? Can you miss it? Inform and educate us on what it is.
Garrett: The term "golden window" is definitely not a technical term in financial planning. Different people refer to it in different ways. But for today's conversation, for people thinking about retirement, I would describe this as a period of financial planning opportunity that exists after you retire but before Social Security and Required Minimum Distributions (RMDs) kick in. To be clear, it's the period after you retire and before Social Security and RMDs begin. For example, a high earner might delay receiving their Social Security benefits until age 70. And RMDs, which have been changing so fast, are now required for most people at age 73. So, this key period—between retirement and the start of Social Security and RMDs—is what we call the golden window. Most of our clients retire before age 70, and this creates a financial planning opportunity where their income has dropped from their earning years but has not yet reached the full, recurring amount that will come from Social Security and RMDs.
Adam: That gives us a good background on the timeframe. What are some things people should be mindful of? What tools, techniques, and topics should be top of mind to make the most of this window?
Garrett: The short answer is Roth conversions. As a financial planner, it's my favorite tool. It's not the answer to everything, but it's the best way to accelerate future income into a current year. If you're trying to minimize taxes over your lifetime, you would use a Roth conversion because you know that your income will be much higher later on due to a large IRA you've built up. You're trying to bring that income forward to be taxed on it now, which may not be fun in the moment, but it can pay dividends down the road. I like to start there, but we really need to back up and talk about a few key things within the golden window: Social Security, RMDs, using your brokerage accounts, and possibly even using a donor-advised fund. For many high-net-worth retirees, there can be strong incentives to delay taking Social Security until age 70 and live on other assets. But delaying Social Security leaves you with another question: what money are you going to live on? This is where having a brokerage account—a non-retirement investment account—is a wonderful asset. You can generate income from that account, and because you already paid taxes on the money you contributed, you can pull funds out without being subject to the full ordinary income tax rate. That is an amazing tool to get money while keeping your income low and creating room for Roth conversions. And then I think the other big one is RMDs. I have a love-hate relationship with the phrase, but sometimes planners can emphasize it too much and call it a "ticking tax bomb."
Adam: It’s the idea that if you have a large traditional IRA, you've never paid taxes on that money. But the longer you wait to touch it, the larger it grows. For the people listening to this podcast, they may not even need all that money. An IRA that’s a couple of million dollars could grow to another million very quickly.
Garrett: And as that IRA grows, your RMDs are going to be bigger. For somebody born in 1952 with a $3 million IRA, the first-year RMD is $113,275. If that account is $4 million, the RMD turns into $150,943. This is just the very first year. If you have $60,000 of Social Security benefits coming in, and maybe a pension on top of that, these RMD numbers can really push you into another tax bracket, from perhaps 24% to 32% or 35%. You need to see the RMD problem in front of you and anticipate it during these golden years when your income may be temporarily low. How do we accelerate some of those future IRA dollars into a current year? The answer is a Roth conversion. The last thing I wanted to mention is a donor-advised fund. For someone with a taxable investment account with highly appreciated securities, you can donate those securities into this fund. You don't have to give it to a charity yet, but it can be a way to increase your itemized charitable giving and create even more room for a Roth conversion.
Adam: We were meeting with a client yesterday who had about a million dollars in an IRA. We helped them understand that since they're in the 24% bracket, they need to think of it as taking 24% out of that account—that's not theirs. Only 76% of that is theirs. This made the Roth conversion a little more palatable for them. The tax man is going to get his money at some point. Are we going to accelerate that up to now, or push that down the road?
Garrett: That's where we move from technical financial planning to behavioral finance. All that money you see in your pre-tax IRA is not yours. The IRS will get a piece of that at some point, and you have to get over that.
Adam: So, what about the person who says, "This golden window is where I can travel and do fun things, and I don't want to be consumed with all this financial planning stuff. I just want to go enjoy life." What advice would you give them?
Garrett: I would say, "Yes, and amen to that." It is a golden window of life where you are able to do things you may not be able to 15 or 20 years from now. It's also a wonderful season to spend money and not always live in fear of the IRS. I think you need to live your life first. If you're married, talk with your spouse and figure out what your family goals are. Figure out what you want your life to look like. Then, after you know what that number is, the answer is doing a tax projection for where your income will end up at the end of the year. Instead of waiting until February to see what happens, the way to live your life and still make prudent financial planning decisions is to figure out what you're going to spend. You have to run the projection for this year before February of the following year. You need to be doing that in July, August, September, and October. Then, whatever is left in that tax room, be prudent with that space and make good decisions there.
Adam: I like the way you put that. It's a golden window for financial planning, but it's also a golden window for life. So, don't miss either window. Be prudent, enjoy the life you've got, but also, don't miss the good opportunities you have that may not be there again once RMDs start.
Garrett: And I would say everybody's going to be different. If you're married, you and your spouse may not retire in the same year. I call that "staggered retirements," and that complicates things. Everybody's situation is unique, and it’s hard to give general advice, but I think the projection part is key for everyone to make up that difference.
Adam: Well, that gives us a good glimpse into this golden window. If you guys like what we're doing, feel free to subscribe on YouTube and follow on Spotify, Amazon Music, and Apple. Also, check out our website, retirementtaxmatters.com. We'll be posting all this content and working on some supplementary content, like a six-point checklist for retirement. I highly recommend downloading it.
Garrett: Absolutely.
Adam: We appreciate y'all following along. Hope you all have a great rest of your day. This is Adam.
Garrett: I am Garrett, and we'll catch you next time.