Retirement & Tax Planning Answers
Should I Skip Roth Conversions and Claim Social Security Early to Leave More to My Kids?
The strategy of claiming Social Security early and skipping Roth conversions to leave more to your children almost always leaves them less, not more. Claiming Social Security at 62 permanently reduces your benefit by 25–30% versus FRA and roughly 75% versus age 70 — including the survivor benefit if your spouse outlives you. Skipping Roth conversions on a $2M IRA leaves heirs with the SECURE Act 10-year rule problem: they must drain the inherited IRA within 10 years, often during their highest-earning years, taxed at their ordinary rates. A $2M pre-tax IRA inherited by children in the 32–37% combined bracket transfers roughly $1.25M after tax. The same $2M converted to Roth at the parents' lower bracket and inherited by the same children transfers roughly $2M tax-free. The Roth conversion plus delayed Social Security combination is one of the largest legacy multipliers available to most households — not the strategy that leaves less to heirs.
The intuition is reasonable. Take Social Security early — it “dies with me anyway,” so I might as well spend the government's money. Skip Roth conversions — why write a tax check now when the IRA can keep growing? Pass the IRA on to my kids and let them deal with it.
The intuition is also wrong, in most cases, by a meaningful amount.
Both decisions look like they preserve wealth for heirs. The math says they usually destroy it. Once you stop treating Social Security as a separate bucket and start treating inherited IRAs the way the tax code actually treats them, the picture flips.
The Two Theses, Examined
Thesis 1: “Take Social Security early so I spend that money instead of my own savings.” This treats Social Security as a separate, less valuable pool of dollars that should be drained first. But Social Security and your portfolio are interchangeable in the household budget — every dollar of one is a dollar you don't need from the other. Claiming early permanently reduces the benefit by 25–30% versus full retirement age and roughly 75% versus age 70. It also permanently reduces the survivor benefit if your spouse outlives you.
Thesis 2: “Skip Roth conversions because I don't want to give up that much money to taxes now.” This treats the conversion tax as a loss. It isn't. The tax is owed either way — the only question is when, by whom, and at what rate. Skipping the conversion shifts the bill to the heir, usually at a higher rate, on a larger compounded balance.
Real Scenario: Mike and His Wife, 57 and 55, $2.17M
$170K Roth, $2M in IRAs/401(k)s, healthy, plan to retire in their early 60s, want to leave money to their adult children.
Plan A — “The intuitive plan”: Claim Social Security at 62. No Roth conversions. Live primarily on Social Security plus Roth withdrawals. Let the IRA grow untouched. Hand it down.
By Mike's age 73, the untouched IRA has compounded to roughly $3.3M–$3.6M (assuming 6% return net of inflation). RMDs begin around $130K/year and grow. Combined with Social Security, they push the household into the 22–24% bracket and the first IRMAA tier. When Mike or his wife dies, the survivor faces single-filer compression on essentially the same RMDs. When the second spouse dies, the children inherit roughly $4M+ of pre-tax IRA. Under the SECURE Act 10-year rule, they must drain it within 10 years. If those children are mid-career professionals in the 32% federal plus state bracket, the after-tax inheritance is roughly $2.6M–$2.8M.
Plan B — “Defer and convert”: Both defer Social Security to 70. Run $80K–$120K of Roth conversions each year from 62 to 72, paying tax in the 22% bracket. Use the larger Social Security to fund spending in their late 60s and beyond.
By Mike's age 73, the IRA has been roughly halved to $1.5M. RMDs are correspondingly smaller. The Roth balance, including growth, is roughly $1.7M–$2.0M and continues compounding tax-free for life. The household pays more tax in their 60s and less in their 70s and 80s. When the second spouse dies, the children inherit a smaller pre-tax IRA plus a substantial Roth — and the Roth is tax-free even under the 10-year rule. After-tax inheritance: roughly $3.4M–$3.7M.
The lifetime difference between Plan A and Plan B for Mike's kids: roughly $700K–$900K of additional after-tax inheritance. The plan that “preserved more for the kids” was the one that wrote the larger tax checks during the parents' lifetime.
Why the Intuition Breaks Down
The early-Social-Security thesis assumes the benefit “dies with me,” so claiming early is free money. The math doesn't agree. Claiming early reduces the size of the dollar stream — and reduces the survivor benefit, which doesn't die with you. For most married couples in average health, the break-even age between claiming at 62 and at 70 is in the late 70s. Living past that age makes deferring the dominant strategy.
The skip-Roth-conversions thesis assumes the conversion tax is a loss. It isn't. Every dollar in a pre-tax IRA has a future tax claim against it. Conversions don't create a tax bill; they pay one that already exists. The question is the rate. Convert at 22% today, or let the kids take it out at 32–37% in their highest-earning years.
The third issue is the SECURE Act 10-year rule. Before 2020, a non-spouse heir could stretch IRA distributions over their own lifetime. After 2020, most non-spouse heirs must fully distribute the inherited IRA within 10 years. That compresses the tax bill into a decade — usually the heir's peak-earning decade — which is exactly the wrong time to layer $200,000–$400,000 of forced ordinary income on top of their wages.
When the Intuitive Plan Actually Works
There are situations where claiming early or skipping conversions makes sense:
- Significantly shortened life expectancy. If you're unlikely to reach the break-even age, claiming earlier captures more total benefit.
- A non-working or much-younger spouse with the lower record. Sometimes the lower-earner claims earlier while the higher earner defers.
- Heirs in zero or very low brackets. If the children are dependents, students, or in genuinely low-income situations, the inherited-IRA tax cost may be smaller than the parents' conversion cost.
- Heavily charitable households. If most of the estate is going to charity, Roth conversions are pointless — charities pay no tax on inherited IRAs.
For Mike's situation — healthy, married, planning to leave the IRA to working-age children — none of these conditions apply.
The Common Mistakes
- Treating Social Security as a separate pool of “free money” rather than as part of household resources.
- Skipping Roth conversions because writing a current-year tax check feels like a loss.
- Ignoring how the SECURE Act 10-year rule compresses heirs' tax brackets.
- Failing to model the surviving spouse's compressed brackets after the first death.
- Building intuition from advice that pre-dates the 2020 SECURE Act changes.
The Bottom Line
The plan that maximizes inheritance for working-age children is usually the opposite of what intuition suggests. Defer Social Security. Convert pre-tax IRA balances to Roth in deliberate, bracket-aware tranches between retirement and 73. Pay tax now — at your bracket — instead of later, at theirs.
The tax is owed either way. The only choice is who pays it and at what rate.