Military Couple, Age 59 — Case Study | Forthright Capital Partners

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Military families retirement planning — tax-efficient income strategy and Roth conversion modeling for military couple

Military Couple, Age 59.

Illustrative Case Study

Client Snapshot

Household

Married couple, both age 59

Background

Retired military (O-5 rank), spouse is a school administrator

Retirement Assets

TSP, Roth IRA, military pension, Survivor Benefit Plan (SBP)

Target Retirement

Within 3 years (spouse), military pension already active

Primary Concern

Tax burden in retirement, income sustainability, healthcare transition

Planning Goal

Tax-efficient income strategy with guaranteed income floor

The Challenge

Like many military families approaching their next chapter, this couple faced a set of interconnected planning concerns. The primary earner had already transitioned out of active duty and was receiving a military pension, while the spouse was still working in education and planning to retire within three years.

Their key concerns included:

A substantial TSP balance sitting primarily in pre-tax accounts, creating future Required Minimum Distribution (RMD) exposure
Uncertainty about when and how much to convert to Roth to manage their tax bracket effectively
A desire for guaranteed income beyond the military pension to ensure lifestyle stability regardless of market conditions
The upcoming TRICARE-to-Medicare transition and its impact on out-of-pocket healthcare costs
Concern about income sustainability for the surviving spouse should one pass away earlier than expected

Planning Focus

The planning engagement centered on two complementary strategies designed to address the couple's core concerns:

1. Roth Conversion Modeling

A multi-year Roth conversion analysis was modeled to identify the optimal annual conversion amounts during the gap years before Social Security and RMDs begin. The analysis considered federal and state tax brackets, Medicare premium surcharge thresholds (IRMAA), and the long-term tax savings of shifting assets into Roth accounts. Multiple scenarios were projected to illustrate the tradeoffs between converting aggressively now versus spreading conversions over a longer window.

2. Income-Floor Strategy Evaluation

An income-floor approach was evaluated to build a layer of guaranteed income on top of the military pension. This involved modeling the potential use of a fixed-index annuity with an income rider to secure a baseline income level that covers essential expenses — independent of market performance. The evaluation compared the floor strategy against a systematic withdrawal approach to help the couple understand the tradeoffs between certainty and flexibility.

Outcome (Modeled / Projected)

Based on the planning analysis, the following projected outcomes were modeled. These are illustrative projections — not guarantees — and actual results will depend on market conditions, tax law changes, and individual circumstances.

~$45K

Projected reduction in lifetime tax liability through strategic Roth conversions over a 6-year window

92%

Modeled essential-expense coverage through guaranteed income sources alone (pension + income floor)

Reduced

Projected RMD burden at age 73, lowering future IRMAA surcharge risk on Medicare premiums

Enhanced

Surviving spouse income continuity through coordinated pension, SBP, and income-floor alignment

Key Principles

Tax Bracket Management Use the gap years between retirement and RMDs to execute strategic Roth conversions that fill lower tax brackets.

Income Floor First Secure essential expenses with guaranteed sources before relying on portfolio withdrawals for discretionary spending.

Survivor Income Continuity Coordinate pension, SBP, and personal income sources to ensure the surviving spouse maintains financial stability.

Healthcare Cost Awareness Plan proactively for the TRICARE-to-Medicare transition, including IRMAA thresholds and supplemental coverage needs.

Important Disclosure

This case study is an illustrative example only and does not represent an actual client or a specific investment outcome. The scenario, figures, and projections described are hypothetical and are intended solely for educational purposes to demonstrate how certain planning strategies might be structured. Actual results will vary based on individual circumstances, market conditions, tax law changes, and other factors. No guarantees are made regarding future performance or outcomes. This material is not a recommendation, offer, or solicitation to buy or sell any securities or adopt any particular investment or planning strategy. Advisory services are offered through Forthright Capital Partners. Always consult with a qualified financial professional before making planning decisions.