Between the last paycheck and the first required minimum distribution, most retirees pass through the lowest-tax years of their adult lives. For someone who stops working at 62 and starts RMDs at 73 under SECURE 2.0, that is an eleven-year window when wages are gone, Social Security may not have started, and the traditional IRA is sitting there fully taxable. It is the single best opportunity in the American tax code to move pre-tax money into a Roth at a discount. And according to the industry data, the typical retiree uses none of it.
The Window Nobody Uses
The mechanics couldn’t be simpler. For a married couple filing jointly, the first $23,850 of income is taxed at just 10%, and anything up to $96,950 stays within the 12% bracket. If you are single, that same 12% rate applies up to $48,475. But here is where the math gets tricky. Once Social Security payments and required minimum distributions begin stacking in your mid‑70s, those brackets fill up fast, and suddenly your marginal rate jumps to 22% or even 24%. Convert during those gap years, and you are paying only 10% or 12%. Wait too long, and the very same dollars come out at roughly double the tax cost, or even more if today’s brackets expire as scheduled.
That is the theory, anyway. In reality, the data from Vanguard and Fidelity tell a very different story. Year after year, only a single-digit percentage of eligible plan participants actually convert, and the median amount converted in plans that offer the feature is essentially zero. The typical retiree is not moving $10,000, nor are they moving $1,000. They are moving nothing at all.
Why the Average Is $0
The first reason is cash. A conversion triggers a taxable event, and the tax has to be paid from outside the IRA to make the math work, though Americans simply do not have that cash lying around. The personal savings rate fell to 2.8% in the second quarter of 2026, the lowest reading in the current data series, with consumption absorbing 93.4% of disposable income. Per capita disposable income rose to $68,958, and the savings rate still went down, so when almost every dollar of income is already committed, writing a five-figure check to the IRS in exchange for a long-term benefit becomes a very hard sell.
The second reason is behavioral. Retirees see a low tax year and feel relief, not opportunity, and the instinct is to underspend the standard deduction and celebrate a small refund rather than voluntarily generate $60,000 of ordinary income to fill up the 12% bracket. The paperwork also looks intimidating, even when the actual keystrokes at a custodian take about ten minutes.
The Cost of Doing Nothing
The rate backdrop makes the missed opportunity sharper. The Fed funds rate sits at 3.75% as of August 18, 2026, down 0.75 percentage points from a year ago. The 10-year Treasury yields 4.68%, while the 2027 Social Security COLA is tracking toward 3.1%, reflecting moderate inflation. Each COLA bump nudges future taxable income higher, which means the marginal bracket a retiree will pay on RMDs a decade from now is more likely to rise than fall.
Consider a 63-year-old with $800,000 in a traditional IRA who does nothing. By age 73, at market growth, the balance can easily double, and the first RMD lands on top of Social Security in a much higher bracket. Convert $60,000 a year during the window at 12%, and roughly $660,000 shifts to Roth, having paid tax at the lowest rate this person will ever see. The tax bill is real. So is the fact that average annual household expenditures reached $78,535 in 2024, and every future RMD dollar taxed at 22% instead of 12% is money that will not cover them.
What to Actually Do
Three moves make the window usable. First, start the Roth five-year clock now with even a token conversion, a tactic Clark Howard listeners have flagged as underused, because the clock runs from the first conversion regardless of amount. Second, size each year’s conversion to fill the 12% bracket exactly, not a dollar more, using a tax projection before December (we sized up those quiet years between the last paycheck and the first RMD in a free Roth window guide). Third, pay the tax from a taxable brokerage account, never from the IRA itself, so every converted dollar actually reaches the Roth. The window closes at 73, whether it gets used or not.
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