Once a month, I share with 904 other Millennials a brief newsletter highlighting the best tips about money I've read.

Hi, I'm Kevin.

Once a month, I share with 904 other Millennials a brief newsletter highlighting the best tips about money I've read.

It’s Not Too Late for a Roth Account

Financially Well

February 20, 2025

On the day you celebrate your 73rd birthday, the IRS will give you an unwelcome gift.

They’ll tell you that, going forward, you must withdraw a certain amount from your pre-tax retirement accounts each year.

These forced withdrawals may bump you into a higher tax bracket. As a result, you also may need to pay higher premiums for Medicare.

But you can avoid this fate, even if you already have pre-tax retirement accounts. You just need to recognize that you now think differently about your financial choices.

Because it’s rarely too late to change.

Nell Irvin Painter is an American historian. Her work focuses on the U.S. South during the 19th century.

Painter rose to become the director of Princeton University’s program in African-American studies. She received honorary degrees from Dartmouth and Yale, among others.

And then, in her 70s, she left her tenured position at Princeton – to attend art school. She ultimately received a bachelor’s of fine arts degree from Rutgers University in 2009.

Ryan Holiday, who writes The Daily Dad, wonders, “How did she have the courage to leave a promising academic career at that age to go to art school?”

Painter gained that courage from her mother. Because her mother showed her that it’s rarely too late to change.

Painter’s mother, Dona, was born in 1917. She was the youngest member of her family. She was shy. And she encountered extra discrimination for having the darkest skin color of all her siblings.

Even so, Dona wrote two books, including a memoir entitled, I Hope I Look That Good When I’m That Old. Her daughter reflects, “I know that took courage for her to speak as an individual and a person whose voice and whose experience is worth your reading.”

But her mother didn’t find her voice, this courage, until she was 85. She didn’t publish her memoir until after she had retired from a lifelong career in the Oakland city schools.

Our perspectives, our preferences, and our interests evolve over time.

We make choices. And then, some time later, we may recognize that we think differently about those choices.

As Ryan Holiday writes to other parents, “Maybe you wish you were around more when they were a toddler. Maybe you wish you were more patient when they were a teenager. Maybe you wish you said I love you more.”

Dona Painter recognized this reality in her 80s. Her daughter, Nell, recognized this reality in her 70s. And perhaps you recognize this now, with either your parenting, your career, or your money.

With your finances, you may now think that you “should have”:

Purchased a house before interest rates increased
Saved more for your retirement while you were single
Opened a college savings account when your child was a newborn
And, yes, invested in Roth accounts when your tax bracket was lower.

Sure, we can’t return to the past. We can’t stop these choices from happening in the first place.

But we can recognize that our past decisions don’t reflect how we now think. And we can recognize that change may be an option.

Dr. Becky Kennedy is a clinical psychologist and the author of Good Inside, a best-selling book about parenting. Kennedy laments, “There’s one question I hear from parents more than any other: ‘Is it too late?’”

Kennedy adds:

“Parents say: ‘But my child is already three and I’ve heard that the first three years are the most important,’ or ‘But my son is eight and I feel like he’s already so old,’ or ‘My daughter is sixteen; I feel like I’ve lost my chance.’ I sometimes even hear, ‘I’m a grandparent now and I wish I had done all of this differently with my own kids . . . I guess it’s too late, huh?’”

She always tells them no. But parents struggle to believe her.

Why do we fail to take the same advice that we’d give others?

As Holiday says:

“We’d never tell our kids it was too late for them, that the best is behind them, that they can’t recover, rebuild, or begin again. No — we’d tell them the opposite. We’d say, ‘It’s not ideal that you waited, but today is the second-best time to start.’ And then we’d cheer them on as they got moving.”

You can recover, rebuild, and begin again with your money, too. And with retirement accounts, Roth conversions can help you get moving.

A Roth conversion requires you to make certain assumptions. But those best guesses can empower you to pay the lowest possible tax rate on your retirement dollars.

For example, let’s imagine a scenario in which you’re taking a year off from work to care for a newborn. Your tax rate during this year will be 0%. And let’s assume that, during your retirement, you’re in a 22% tax bracket.

You’ll need to pay income taxes on your pre-tax retirement contributions at some point. Would you rather do so during the year your income puts you in a 0% tax bracket or a 22% bracket?

A Roth conversion during an unusually low income-tax year will minimize how much you pay in taxes on that money. And then those dollars grow tax-free in the Roth account indefinitely.

Can we guarantee a successful outcome? No. As my colleague Meg Bartelt says, “We have to do Roth conversions when we’re ‘pretty sure’ that our current tax rate is lower than what our future tax rates will be.”

Our past choices weren’t perfect. But thankfully, we have new choices ahead of us.

Holiday suggests, “What you can do is commit to being better, right here, right now. What you can do is be better moving forward.”

With money, as with parenting, it’s rarely too late.