Mid-Range Retirement Planning: Strategic Positioning and Decision Timing

With 1-3 years to retirement, you have time for Roth conversions while still employed, Social Security analysis, and pension decisions. Waiting longer means losing conversion opportunities once you retire and income drops.

What to do in this window:

• Start Roth conversions before retirement. While still earning, your income is higher but predictable. A CPA can model how much to convert each year to fill lower brackets without triggering IRMAA surcharges. After you retire, you get a second conversion window before required minimum distributions begin at age 73.
• Model Social Security claiming strategies. The difference between claiming at 62, full retirement age, and 70 can be hundreds of thousands over a lifetime. The optimal age depends on health, marital status, and whether a spouse will claim survivor benefits.
• Evaluate pension options. If you have a defined-benefit pension, you'll choose between a lump sum and an annuity. The lump sum can be rolled into an IRA, giving investment control but adding RMD obligations. The tax implications differ significantly.
• Plan deferred compensation distributions. If you have a nonqualified deferred comp plan, you must typically elect the payout schedule before retirement. Once made, the election generally can't be changed without triggering immediate taxation.

The tradeoff: Starting one to three years out is good timing, but the sooner the better. Each year of delay is a year of Roth conversion opportunity lost.