You are in an interesting income range. At 59, do you have a good idea what your Social Security benefit(s) will be? If so, you need to take that into account. Some time ago, I wrote an article titled The Phantom Couple’s Tax Rate Zone in which I analyzed how a 15% bracket couple experience a phantom 27.5% rate as their social security benefit becomes taxed.
There are a number of variables to consider, but the point remains -
file a joint return, and you and your spouse have a combined income
- that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
- more than $44,000, up to 85 percent of your benefits may be taxable. are married and file a separate tax return, you probably will
pay taxes on your benefits.
*Note – Your adjusted gross income+ Nontaxable interest+ ½ of your Social Security benefits= Your “combined income”
For the article, I assumed $40K in SS benefit, which meant that once taxable other income exceeded $24K, you were paying tax on the benefit in addition to the tax on the withdrawal.
I suggest you use some tax software, free, or paid, and do some simple forecasting. One strategy is to retire at 64, as you suggest, but don't take the SS benefit so soon. Use the first few years to fill up the 15% bracket and draw down your account a bit. This extra time will increase your benefit. Even converting at 25% might make sense, but you still have to run the numbers.