Latest news with #BrianKearns
Yahoo
01-06-2025
- Lifestyle
- Yahoo
Cruise cabin math: When booking two rooms makes more sense than one
'Family Travel' is a five-part series showcasing the best experiences and destinations for young families looking for an escape. If you'd like to contribute to our future reporting and share your experience as a source, you can click here to fill out this quick form. Brian and Julie Kearns take cruises with their three children at least twice a year – but they don't always stay together. Sometimes the couple books adjacent cabins, or a balcony stateroom with another across the hall, depending on what offers the best price. They have all piled into a single five-person cabin, too, but found it to be 'extremely tight,' particularly as their kids – 14, 11 and 10 – have gotten older, according to Julie. 'They have more luggage (than when they were younger) – and they're just bigger,' said Julie, who runs the How We Cruise YouTube channel and travel agency alongside Brian. Cruise lines offer a variety of cabin options for travelers with children, but finding the right one for a given family can be a complex process. 'It's kind of like a puzzle,' said Jared Feldman, owner of travel agency Jafeldma Travel. 'How does it best fit?' Here's what travelers should know. Standard cruise cabins can typically accommodate a maximum of four guests (though some can fit five). Cabins accommodating three, four or five guests have a mattress that can be split into two twin beds, along with a pull-out sofa or a Pullman bed that pulls down from the ceiling or out from the wall, according to Feldman. Brian Kearns added that depending on the cruise line and type of cabin guests are in, they could have one or the other or a combination. Julie noted that as more cruise lines have cut stateroom cleaning back from twice to once a day in recent years, she has noticed that those aren't necessarily tucked back away like they were previously. 'If you're coming back into the room to change for dinner or take a rest or whatever you're doing, you have lost all that space that you might have had years ago,' she said. Cruise lines also offer connecting staterooms and family cabins. Feldman likened the latter category to a junior suite. Julie Kearns said staying in a Family Infinite Ocean View Balcony room on Royal Caribbean International's Icon of the Seas last year, which has a separate bunk room for kids, was a 'game changer.' However, Feldman warned that not all ships have family category cabins, and they tend to sell out quickly on the ones that do. Older ships, which typically have fewer activities such as rock climbing walls and go-karts, are less likely to have family-centric staterooms. Cruise lines also offer a wide range of suites, ranging from suped-up cabins with a bit of extra room to multi-level spaces that resemble houses rather than the typical accommodations at sea. Those include the three-level Ultimate Family Townhouse aboard Icon, and the EPCOT-inspired Tomorrow Tower Suite on Disney Cruise Line's newest ship, Disney Treasure. Like the Kearns have done, families could split into different rooms, as well, depending on the age of their children. Carnival Cruise Line, for example, requires passengers 14 and under to be in the same cabin or a connecting room as a relative or guardian at least 25 years old, according to its website. Teenagers between 15 and 17 can be booked no more than three staterooms away from those adults. Not necessarily. Depending on the cruise line, itinerary, cabin category and other factors, splitting a room isn't always the better deal. 'Sometimes two double-occupancy staterooms can cost less than a quad-occupancy stateroom,' said Feldman. 'There are times it can cost a little bit more, but even when it does cost a little bit more, you have to realize what you're getting out of it.' Two rooms offer twice the living space and double the bathrooms, he noted. If you work with a travel advisor, potential perks like onboard credit would apply to both cabins. Larger family staterooms also tend to be pricier. For example, a 335-square-foot Family Infinite Ocean View Balcony cabin aboard Icon currently starts at $1,531 per person for a seven-night Eastern Caribbean cruise departing May 2, 2026, according to the line's website. A 246-square-foot Central Park View Balcony currently costs $1,027 per person for the same sailing. But the cost could be worth it depending on how many people are in your party. "When it comes to each family, it depends on what your idea of value is," said Brian Kearns. Cruise ship kids clubs: Here's everything to know Here are some of the family-friendly offerings guests will find on major cruise lines, though exact offerings may vary by ship: Carnival: Connecting rooms are available for all of Carnival's stateroom types. The line's upcoming ship, Carnival Festivale, will have 1,000 interconnecting rooms, the most of any vessel in its fleet. Carnival's Family Harbor Staterooms & Suites on Excel and Vista Class ships also offer guests additional space and perks like access to the Family Harbor Lounge, where they will find snacks, board games, video games and more. Royal Caribbean: The cruise line offers a wide range of interior, ocean view and balcony cabins, in addition to suites. There are more than 20 accommodation types on its newest ship, Utopia of the Seas, alone. In addition to Icon's Ultimate Family Townhouse with an in-suite slide, cinema, karaoke and private patio, and a similar two-story Ultimate Family Suite on several other ships. Disney Cruise Line: Disney has family-friendly amenities in cabins throughout its fleet, such as ample under-bed storage and split bathrooms, with a sink and shower in one room and a toilet and sink in another. Keep an eye out special reveals above pull-down bunk beds, like a Fairy Godmother constellation on Disney Wish and an illuminated Genie on Disney Treasure. The line also has accommodations for larger families, including five-person staterooms, connecting rooms and suites. MSC Cruises: Travelers will find staterooms for families of varying sizes on MSC ships. Almost all vessels in its fleet have connecting family cabins that can accommodate as many as 10 passengers. The line's five-person cabins – found on ships like MSC Bellissima, MSC Grandiosa, MSC Magnifica and MSC Virtuosa – frequently have balconies or panoramic windows and bathtubs. Norwegian Cruise Line: Guests sailing with Norwegian can choose from luxe, multi-room suites in the The Haven ship-within-a-ship area, an expanded range of solo cabins and many others in between. The line's Three-Bedroom Garden Villas, which have sweeping ocean views, a dining room and a private garden with a hot tub, are popular with larger family groups, according to the cruise line. With so many options and variables, Feldman said the choice comes down to individual needs and preferences. 'So, it's important to look at all aspects of it and decide what works best for each family." Nathan Diller is a consumer travel reporter for USA TODAY based in Nashville. You can reach him at ndiller@ This article originally appeared on USA TODAY: Sharing a cruise cabin with kids? Splitting up may actually be better
Yahoo
09-04-2025
- Business
- Yahoo
What to do if the stock market's big drop is getting to you
Your portfolio, whether in a 401(k), IRA or brokerage account, is almost certainly in the red year-to-date after the precipitous stock plunge over the past week following President Trump's announcement of his tariffs regime. If you also have bonds and cash in your portfolio, the good news is that you likely lost much less than you would have otherwise. The same goes if you had some exposure to non-US equities, which have outperformed domestic stocks this year, even though they, too, got hit in the past week. Sure, 'losing less' hardly feels like 'winning.' And your pile is still smaller – at least on paper for now. But losing less than you might have should provide a little comfort since the stock market will go through bear markets and near-bear markets many times in every investor's life. Having a diversified portfolio will almost always reduce your portfolio's risk and volatility. 'This is a great time for younger people to learn a lesson for the next four to five decades. These market moves have happened before and will happen again. It's what markets do,' said Brian Kearns, a certified financial planner and registered investment advisor. In the near term, markets will remain on a knife's edge, with stocks likely to bounce back at times on any perceived good news or traders' sense that stocks may have been oversold. On Monday morning, for instance, stocks quickly but briefly gained ground after someone posted, falsely, that Trump would consider a 90-day pause in tariffs. So, what to do now? Here is some perspective and advice from financial experts. Mainstream economists, investors and CEOs are having a hard time making economic sense of what Trump is doing with his punitive tariffs. That's why there's no guarantee as to how they will affect stocks in the long run. But the going assumption is that stocks, as they have over the past century, will eventually bounce back. Over the long run, they have provided solid returns for investors that far outpaced inflation. So do a diversified mix of investments. Take the 60/40 portfolio – with 60% in stocks and 40% in fixed-income assets like government and corporate bonds. Typically, when stocks do poorly, bonds do better. Even though the 60/40 portfolio has had some bad single-year performances – it got hammered in 2022, for example – over time, it has offered a lot of ballast for investors. From 1901 through 2022, the median return of a US-based 60/40 portfolio was 6.4%, and when measured over 10-year rolling periods, it was 5.81%, according to a study from the Chartered Financial Analyst Institute. 'The long-term stability of the 60/40 portfolio in the United States has been noteworthy, mainly because of the market's strong resilience and recovery after significant downturns,' the authors wrote. If you're ever tempted to cash out of equities when stocks are going haywire, know that such a move can be risky for two reasons. First, selling when stocks are low locks in your losses. Since timing the market is impossible, you may re-enter after a recovery begins, potentially repurchasing what you used to own at a higher price. Second, you may get too comfortable keeping the cash. Not only will it not grow nearly as much as equities in the long run, but you risk losing spending power if inflation increases, which is expected to happen under Trump's tariffs. Even if you can get a nominal rate of return that matches or outpaces inflation – say on a certificate of deposit – the tax you owe on the interest may erase that advantage. 'What is cash doing for you? Is there inflation? Absolutely. So what is your after-tax rate of return?' said CFP Frank Wong, a principal at W Wealth Strategies. Big stock declines can provide long-term buying opportunities. 'If you went to the supermarket (last month) and tuna was $3 for two cans and now it's $3 for 4 cans, what do you do? You buy more cans,' Wong said. But that doesn't mean you should do so indiscriminately when buying into stock indexes. 'Wade in, don't dive,' Kearns advised, noting that before the latest rout, stocks have been overvalued relative to the risk investors took to own them. Target-date funds in your 401(k) – which invest with an eye toward the year you are likely to retire – should do this kind of risk management for you. Most people under 50 have a long time before retirement, allowing them to invest more heavily in stocks. However, many people over 50 also have a long horizon during which to invest — potentially 15 to 30 years. That is because the majority of their savings will remain invested throughout much of their retirement, as they typically withdraw only small amounts annually to supplement income from Social Security and any pensions. That said, for money you will need within the next five years, be very conservative, Wong advised. 'Whatever you have now, I'd hold.' Ideally, you'd keep that money in short-term fixed income and high-yield savings so that it earns at least enough to keep pace with inflation. Retirees and those within a few years of retirement should avoid selling any of their stock holdings when the market is down. Instead, you will want to have up to two years of cash to cover your living expenses on top of any fixed income payments you'll get. If you have to tap your current portfolio to raise that cash right now, 'pull from assets that haven't fallen a lot during this period – for example, high-quality bonds,' said Christine Benz, director of personal finance and retirement planning at Morningstar. If you're still working, she said, try to boost your savings. If you're over 50, you're entitled to make catch-up contributions in your 401(k). And those catch-up contribution limits are even higher if you're in your early 60s. Lastly, do a 'budget audit' to see where you can reduce your spending, Benz recommends. 'In addition to boosting savings and building out your cash buckets, that strategy has an emotional 'take control' benefit. Having a tighter budget will help reduce portfolio withdrawals once retirement commences,' Benz said. For retirees who are no longer saving, she also advises trying to adjust spending during market downturns. 'That will leave more of their portfolios in place to recover when the market eventually does,' she noted.
CNN
08-04-2025
- Business
- CNN
What to do if the stock market's big drop is getting to you
Your portfolio, whether in a 401(k), IRA or brokerage account, is almost certainly in the red year-to-date after the precipitous stock plunge over the past week following President Trump's announcement of his tariffs regime. If you also have bonds and cash in your portfolio, the good news is that you likely lost much less than you would have otherwise. The same goes if you had some exposure to non-US equities, which have outperformed domestic stocks this year, even though they, too, got hit in the past week. Sure, 'losing less' hardly feels like 'winning.' And your pile is still smaller – at least on paper for now. But losing less than you might have should provide a little comfort since the stock market will go through bear markets and near-bear markets many times in every investor's life. Having a diversified portfolio will almost always reduce your portfolio's risk and volatility. 'This is a great time for younger people to learn a lesson for the next four to five decades. These market moves have happened before and will happen again. It's what markets do,' said Brian Kearns, a certified financial planner and registered investment advisor. In the near term, markets will remain on a knife's edge, with stocks likely to bounce back at times on any perceived good news or traders' sense that stocks may have been oversold. On Monday morning, for instance, stocks quickly but briefly gained ground after someone posted, falsely, that Trump would consider a 90-day pause in tariffs. So, what to do now? Here is some perspective and advice from financial experts. Mainstream economists, investors and CEOs are having a hard time making economic sense of what Trump is doing with his punitive tariffs. That's why there's no guarantee as to how they will affect stocks in the long run. But the going assumption is that stocks, as they have over the past century, will eventually bounce back. Over the long run, they have provided solid returns for investors that far outpaced inflation. So do a diversified mix of investments. Take the 60/40 portfolio – with 60% in stocks and 40% in fixed-income assets like government and corporate bonds. Typically, when stocks do poorly, bonds do better. Even though the 60/40 portfolio has had some bad single-year performances – it got hammered in 2022, for example – over time, it has offered a lot of ballast for investors. From 1901 through 2022, the median return of a US-based 60/40 portfolio was 6.4%, and when measured over 10-year rolling periods, it was 5.81%, according to a study from the Chartered Financial Analyst Institute. 'The long-term stability of the 60/40 portfolio in the United States has been noteworthy, mainly because of the market's strong resilience and recovery after significant downturns,' the authors wrote. If you're ever tempted to cash out of equities when stocks are going haywire, know that such a move can be risky for two reasons. First, selling when stocks are low locks in your losses. Since timing the market is impossible, you may re-enter after a recovery begins, potentially repurchasing what you used to own at a higher price. Second, you may get too comfortable keeping the cash. Not only will it not grow nearly as much as equities in the long run, but you risk losing spending power if inflation increases, which is expected to happen under Trump's tariffs. Even if you can get a nominal rate of return that matches or outpaces inflation – say on a certificate of deposit – the tax you owe on the interest may erase that advantage. 'What is cash doing for you? Is there inflation? Absolutely. So what is your after-tax rate of return?' said CFP Frank Wong, a principal at W Wealth Strategies. Big stock declines can provide long-term buying opportunities. 'If you went to the supermarket (last month) and tuna was $3 for two cans and now it's $3 for 4 cans, what do you do? You buy more cans,' Wong said. But that doesn't mean you should do so indiscriminately when buying into stock indexes. 'Wade in, don't dive,' Kearns advised, noting that before the latest rout, stocks have been overvalued relative to the risk investors took to own them. Target-date funds in your 401(k) – which invest with an eye toward the year you are likely to retire – should do this kind of risk management for you. Most people under 50 have a long time before retirement, allowing them to invest more heavily in stocks. However, many people over 50 also have a long horizon during which to invest — potentially 15 to 30 years. That is because the majority of their savings will remain invested throughout much of their retirement, as they typically withdraw only small amounts annually to supplement income from Social Security and any pensions. That said, for money you will need within the next five years, be very conservative, Wong advised. 'Whatever you have now, I'd hold.' Ideally, you'd keep that money in short-term fixed income and high-yield savings so that it earns at least enough to keep pace with inflation. Retirees and those within a few years of retirement should avoid selling any of their stock holdings when the market is down. Instead, you will want to have up to two years of cash to cover your living expenses on top of any fixed income payments you'll get. If you have to tap your current portfolio to raise that cash right now, 'pull from assets that haven't fallen a lot during this period – for example, high-quality bonds,' said Christine Benz, director of personal finance and retirement planning at Morningstar. If you're still working, she said, try to boost your savings. If you're over 50, you're entitled to make catch-up contributions in your 401(k). And those catch-up contribution limits are even higher if you're in your early 60s. Lastly, do a 'budget audit' to see where you can reduce your spending, Benz recommends. 'In addition to boosting savings and building out your cash buckets, that strategy has an emotional 'take control' benefit. Having a tighter budget will help reduce portfolio withdrawals once retirement commences,' Benz said. For retirees who are no longer saving, she also advises trying to adjust spending during market downturns. 'That will leave more of their portfolios in place to recover when the market eventually does,' she noted.
Yahoo
06-04-2025
- Business
- Yahoo
Wondering if you should convert your tax-deferred retirement savings to a Roth? Here's what to consider
Having financial flexibility in retirement — especially in being able to maximize your spending while minimizing your taxes — is an optimal situation. And it's one you can arrange by keeping at least some of your retirement savings in a tax-free account. 'You're giving yourself more options in the future,' said Brian Kearns, an Illinois-based certified public accountant and certified financial planner. One way to do that is to convert at least some of your tax-deferred savings in your 401(k) or traditional IRA into a Roth account. Money rolled into Roth 401(k)s and Roth IRAs grow tax free and may be withdrawn tax-free so long as you leave it in the account for at least five years after the rollover. Unlike creating a Roth IRA and making new contributions to it every year, there is no income limit on who may convert their savings into a Roth (or who may contribute to a Roth 401(k) on an ongoing basis, either). Another advantage: In retirement, you get to decide how much and when you make withdrawals from your Roth savings, whereas with tax-deferred savings in traditional IRAs or 401(k)s, you must start taking required minimum distributions at age 73. That said, Roth conversions aren't the right answer for everyone. Here is a look at what to consider before making a move. The vast majority of 401(k) plans (93%) let participants create a Roth 401(k) account within the plan; and 60% of those allow for so-called 'in-plan Roth conversions,' according to the Plan Sponsor Council of America. An in-plan conversion means you can choose to convert some or all of your accumulated tax-deferred savings into after-tax Roth savings. The catch: You will have to pay the income tax owed on any money you convert the year you make the conversion. That's why for a lot of people the decision of how much to convert at any one time comes down to whether they have money available to pay that tax bill, said Tara Popernik, the head of wealth strategies at Bernstein Private Wealth Management. Say you convert $100,000 this year. That amount is added to your gross income and may end up pushing you into a higher tax bracket. So, say you're normally in the 22% federal bracket, it could push you into the 24% bracket. And that means on top of the taxes you owe on your annual income, you might owe an additional $24,000 (24% x $100,000) plus any applicable state income tax. If ever there was a time to consult a CPA, or a certified financial planner with tax experience who has helped many clients weigh Roth options, this is it. (They also can help you assess whether a conversion will make sense should lawmakers later this year choose to extend some or all of the expiring 2017 tax provisions.) But, generally speaking, here are some questions to consider when deciding whether a conversion would be a good move: 1. Do you expect your income to grow between now and retirement? If you're in the first half of your career, chances are your earnings will grow between now and when you call it quits. And that means you're likely to move into a higher tax bracket in the coming years. So it might be more advantageous to do a conversion sooner rather than later because your tax bill will be lower and your tax-free savings will have longer to grow. 2. Can you afford the immediate tax bill? Ideally, you should have enough cash on hand to pay that one-time tax bill — cash you will not need for current living expenses, upcoming debt payments or emergencies. If you have to raise the cash, Popernik said, try to avoid selling anything that would incur a capital gains tax, because that would reduce the advantage of converting. So, too, in most instances, would tapping your tax-deferred retirement savings just to pay the conversion bill — especially if you're under 59-1/2, since you will be subject to a 10% early withdrawal penalty on top of the income taxes you'd owe. Again, lean on your tax adviser to help you figure out which, if any, cash-raising strategy makes sense. If it turns out paying the tax bill on a lump-sum conversion would be too burdensome, and you have the option of contributing to a Roth 401(k), you can start making taxable contributions to it on a go-forward basis. Or, if your income is low enough, you can start your own Roth IRA. 3. Will your taxes go up in retirement? Trick question. The only truly correct answer is 'Who knows?' But, based on the tax system we have today, you can roughly gauge where things might go if the world — and the US tax code — don't do a complete 180. Generally speaking, if you anticipate your income taxes will be higher in retirement than now, converting tax-deferred savings to a Roth is likely advantageous. And by making a conversion sooner, you're likely to get the most value from it. 'The longer the money stays invested in the Roth, the bigger the benefit,' Popernik said. 4. When is the best time to convert, markets-wise? A recent analysis from Bernstein Private Wealth Management suggests the ideal time to convert your tax-deferred money to a Roth would be when markets are down. If you do, you'll get the most bang for your tax buck. By investing in assets through a Roth when they are at their lows, 'the subsequent gains when the recovery takes hold can be sheltered in a tax-free environment,' the report noted. That said, it's impossible to time market lows and highs. And the Bernstein analysis found that even converting when asset prices are at a peak may still confer long-term tax-free gains that might make a conversion worth it. 5. What income sources will you draw on when you retire? One way to guesstimate your tax obligations in retirement vs. now is to consider a) how much income you'll need to live on; and b) what your income sources will be, keeping in mind that not all sources of income are taxed alike. So, for instance: Will you have income from a pension on top of your Social Security benefits? Will you receive rental income from a property? Will you be drawing on taxable income like interest and dividends? Or on tax-free interest from municipal bonds? Having both taxable and tax-free savings to draw on can help you optimize your withdrawal strategies. For example, Kearns said, for the years when your taxable income will be lower than other years in retirement, you might pull from your traditional tax-deferred accounts for any money you need on top of your Social Security, because you will be in a lower tax bracket. Whereas in years when your taxable income might be higher — say, when you have to start taking required minimum distributions from an IRA or you're selling a taxable asset — you might tap your tax-free savings to supplement the money you need for living expenses. 6. Do you want to leave a legacy? Roth accounts have advantages over tax-deferred accounts when bequeathing money to non-spousal heirs. No matter which type of account they inherit, your heirs must take all the money from them within 10 years. But with traditional tax-deferred 401(k)s and IRAs, they must take distributions every year and pay the tax on them. That may have the effect of pushing them into a higher tax bracket, Kearns said. 'They will have a tax bill they might not having been planning on.' But with the Roth, not only do they get the money tax free, they don't have to take regular distributions during the 10-year window, and instead may take it out all at once in the 10th year, Popernik said. That gives them another decade of tax-free growth on their inheritance. Sign in to access your portfolio
CNN
06-04-2025
- Business
- CNN
Wondering if you should convert your tax-deferred retirement savings to a Roth? Here's what to consider
Having financial flexibility in retirement — especially in being able to maximize your spending while minimizing your taxes — is an optimal situation. And it's one you can arrange by keeping at least some of your retirement savings in a tax-free account. 'You're giving yourself more options in the future,' said Brian Kearns, an Illinois-based certified public accountant and certified financial planner. One way to do that is to convert at least some of your tax-deferred savings in your 401(k) or traditional IRA into a Roth account. Money rolled into Roth 401(k)s and Roth IRAs grow tax free and may be withdrawn tax-free so long as you leave it in the account for at least five years after the rollover. Unlike creating a Roth IRA and making new contributions to it every year, there is no income limit on who may convert their savings into a Roth (or who may contribute to a Roth 401(k) on an ongoing basis, either). Another advantage: In retirement, you get to decide how much and when you make withdrawals from your Roth savings, whereas with tax-deferred savings in traditional IRAs or 401(k)s, you must start taking required minimum distributions at age 73. That said, Roth conversions aren't the right answer for everyone. Here is a look at what to consider before making a move. The vast majority of 401(k) plans (93%) let participants create a Roth 401(k) account within the plan; and 60% of those allow for so-called 'in-plan Roth conversions,' according to the Plan Sponsor Council of America. An in-plan conversion means you can choose to convert some or all of your accumulated tax-deferred savings into after-tax Roth savings. The catch: You will have to pay the income tax owed on any money you convert the year you make the conversion. That's why for a lot of people the decision of how much to convert at any one time comes down to whether they have money available to pay that tax bill, said Tara Popernik, the head of wealth strategies at Bernstein Private Wealth Management. Say you convert $100,000 this year. That amount is added to your gross income and may end up pushing you into a higher tax bracket. So, say you're normally in the 22% federal bracket, it could push you into the 24% bracket. And that means on top of the taxes you owe on your annual income, you might owe an additional $24,000 (24% x $100,000) plus any applicable state income tax. If ever there was a time to consult a CPA, or a certified financial planner with tax experience who has helped many clients weigh Roth options, this is it. (They also can help you assess whether a conversion will make sense should lawmakers later this year choose to extend some or all of the expiring 2017 tax provisions.) But, generally speaking, here are some questions to consider when deciding whether a conversion would be a good move: 1. Do you expect your income to grow between now and retirement? If you're in the first half of your career, chances are your earnings will grow between now and when you call it quits. And that means you're likely to move into a higher tax bracket in the coming years. So it might be more advantageous to do a conversion sooner rather than later because your tax bill will be lower and your tax-free savings will have longer to grow. 2. Can you afford the immediate tax bill? Ideally, you should have enough cash on hand to pay that one-time tax bill — cash you will not need for current living expenses, upcoming debt payments or emergencies. If you have to raise the cash, Popernik said, try to avoid selling anything that would incur a capital gains tax, because that would reduce the advantage of converting. So, too, in most instances, would tapping your tax-deferred retirement savings just to pay the conversion bill — especially if you're under 59-1/2, since you will be subject to a 10% early withdrawal penalty on top of the income taxes you'd owe. Again, lean on your tax adviser to help you figure out which, if any, cash-raising strategy makes sense. If it turns out paying the tax bill on a lump-sum conversion would be too burdensome, and you have the option of contributing to a Roth 401(k), you can start making taxable contributions to it on a go-forward basis. Or, if your income is low enough, you can start your own Roth IRA. 3. Will your taxes go up in retirement? Trick question. The only truly correct answer is 'Who knows?' But, based on the tax system we have today, you can roughly gauge where things might go if the world — and the US tax code — don't do a complete 180. Generally speaking, if you anticipate your income taxes will be higher in retirement than now, converting tax-deferred savings to a Roth is likely advantageous. And by making a conversion sooner, you're likely to get the most value from it. 'The longer the money stays invested in the Roth, the bigger the benefit,' Popernik said. 4. When is the best time to convert, markets-wise? A recent analysis from Bernstein Private Wealth Management suggests the ideal time to convert your tax-deferred money to a Roth would be when markets are down. If you do, you'll get the most bang for your tax buck. By investing in assets through a Roth when they are at their lows, 'the subsequent gains when the recovery takes hold can be sheltered in a tax-free environment,' the report noted. That said, it's impossible to time market lows and highs. And the Bernstein analysis found that even converting when asset prices are at a peak may still confer long-term tax-free gains that might make a conversion worth it. 5. What income sources will you draw on when you retire? One way to guesstimate your tax obligations in retirement vs. now is to consider a) how much income you'll need to live on; and b) what your income sources will be, keeping in mind that not all sources of income are taxed alike. So, for instance: Will you have income from a pension on top of your Social Security benefits? Will you receive rental income from a property? Will you be drawing on taxable income like interest and dividends? Or on tax-free interest from municipal bonds? Having both taxable and tax-free savings to draw on can help you optimize your withdrawal strategies. For example, Kearns said, for the years when your taxable income will be lower than other years in retirement, you might pull from your traditional tax-deferred accounts for any money you need on top of your Social Security, because you will be in a lower tax bracket. Whereas in years when your taxable income might be higher — say, when you have to start taking required minimum distributions from an IRA or you're selling a taxable asset — you might tap your tax-free savings to supplement the money you need for living expenses. 6. Do you want to leave a legacy? Roth accounts have advantages over tax-deferred accounts when bequeathing money to non-spousal heirs. No matter which type of account they inherit, your heirs must take all the money from them within 10 years. But with traditional tax-deferred 401(k)s and IRAs, they must take distributions every year and pay the tax on them. That may have the effect of pushing them into a higher tax bracket, Kearns said. 'They will have a tax bill they might not having been planning on.' But with the Roth, not only do they get the money tax free, they don't have to take regular distributions during the 10-year window, and instead may take it out all at once in the 10th year, Popernik said. That gives them another decade of tax-free growth on their inheritance.
