Hi M,
Some quick things to think about...
Assuming no changes in tax law for the next 40 years...
#1
When you are 90 years old and doing RMDs, let's say you have a mandatory withdrawal of $300k (inflation adjusted, $3 million IRA value) as your only non-SS income. That means you will have a federal marginal tax rate for MFJ of 24% (effective tax rate of ~18%.)
Compare that to year 1-n of retirement, doing Roth conversions to reduce future taxes...
You'll pay 10% - 12% federal income tax.
You'll also pay 10-15% "ACA tax" via increased insurance premiums / reduced ACA subsidies.
You may potentially also pay more $ for the medical care you do use, through reduced cost-sharing subsidies. This could be another few % "tax"
Or another way to say this,
you could be paying guaranteed 25%-27% tax rates now to avoid possible 24% tax rates later.
I go through some of this in a post that explores the idea of us moving to California in a few years and using the ACA for insurance.
https://www.gocurrycracker.com/going-back-to-cali/The tax idea is explored further in the subsequent post (see the charts):
https://www.gocurrycracker.com/harvesting-massive-capital-gains/(The numbers are not the same as your situation, but the concepts are... )
In short, while on the ACA I would argue to keep your income below 250% FPL if you can do keep CSR subsidies and marginal tax rates below 25%.
#2
The SEPP is a good tool for people retiring within 5-10 years of age 59.5 (i.e. you)
Because you are making a commitment to continue annual withdrawals for 10 years if you start an SEPP at age 50, it is best to break existing Traditional accounts into several Traditional IRAs and start an SEPP on just 1 of them
Considering the alternative is to do a Roth conversion and a withdrawal of prior year Roth contributions in the same year, I would probably opt for the SEPP
#3
Starting SS earlier or later is actuarially neutral for the SSA, i.e. they expect to pay you the same total amount. The idea to delay for greater payments later is often done by people with minimal real assets, who know they can't survive long term on the smaller amounts.
My intention is to decide when to take SS when I come of age. I'll do this based on my health and the current state of the world.
If I am in perfect health, then delaying can have good ROI if I believe I can live well beyond what the actuarial tables say. But if my body is already failing, then start sooner as my heirs can't inherit my social security
And if the world is in a crappy place (WW3 just started, stock market collapsed, another wave of COVID-2032, etc...) then I can start SS early(er) so avoid drawing down assets in a bad market.
For your idea of having an extra year or more to do lower tax Roth conversions to avoid high tax later, it really depends on the value of the IRA at that point - if your IRA is worth $3 million then a Roth conversion of $10k doesn't make much difference whether it is tax free or not.
In summary:
- SEPPs are good
- do the tax math on Roth conversions now vs RMDs later (it's not as great as many think)
- when to take SS is dependent on health and wealth
Let me know if this makes sense or not