Episode 386: Convert to Roth… But Not TOO Much: The $400,000 Rule Explained

David McKnight addresses an issue he sees more and more in his conversations with retirees and pre-retirees: the so-called Roth over-conversion trap.  The problem stems from converting too much money with the result of shortening the lifespan of your retirement savings. David believes that the reason why many Americans are racing to convert everything they have in their IRAs and 401(k)s has to do with the fear about where the country is headed financially. Penn Wharton has warned repeatedly that, if we don't right our fiscal ship by 2043, no combination of raising taxes or reducing spending will arrest the financial collapse of the country. According to former Comptroller General of the U.S. Government David M. Walker tax rates could have to double to pay for the country's massive $200 trillion unfunded obligations for Social Security, Medicare, and Medicaid. The debt-to-GPD ratio, which is one of the simplest measures of a nation's financial health, keeps climbing higher: By 2035 it w...