A Pension, a Survivor Benefit, and a Six Year Conversion Window

Financial Snapshot

• Age 67, widowed, retired six months ago from a hospital nursing career
• Pension paying $34,000 per year, fixed, with no cost of living adjustment
• 403(b) and rollover IRA totaling $1,500,000, all pretax
• Taxable brokerage account of $300,000 plus $120,000 in cash
• Survivor benefit on her late husband's record estimated at $28,000 per year; her own benefit at 70 projected near $33,000
• Spending goal of about $85,000 per year, roughly $68,000 of it essential

The Challenge

On paper Maggie is fine. The tension is sequencing. Her pension is fixed, so inflation erodes it every year. Her $1.5 million of pretax savings will generate required minimum distributions at 73 that could push a single filer past tax and Medicare thresholds she has never had to think about. And the claiming decision is not one choice but two: which benefit to take now, and which to let grow. Widowhood also moved her from married brackets to single brackets, so every dollar of income is taxed more steeply than it was three years ago.

Our Approach

We started with claiming, because survivor benefits follow different rules than most people expect. Deemed filing does not apply to survivor benefits, so Maggie can take the survivor benefit on her late husband's record now, at her full retirement age, and let her own retirement benefit earn delayed credits until 70. The survivor benefit is an estimated $28,000 per year and is already at its maximum. Her own benefit still grows 8 percent per year and projects near $33,000 at 70. She collects the one that is done growing and lets the other compound, then switches if hers is larger. It is the one genuinely flexible move in her claiming picture, and preserving it costs nothing.

Next we built the income floor. Pension plus survivor benefit comes to roughly $62,000 per year, covering about nine tenths of her essential spending before the portfolio contributes a dollar. The remaining gap, about $23,000 per year plus taxes, comes from the taxable account first. To protect against a bad market early in retirement, we hold roughly three years of planned withdrawals, about $90,000, in cash and short term bonds. If stocks fall hard, withdrawals shift to the reserve and nothing gets sold at depressed prices.

Then we opened the Roth conversion window. Between now and 73, when her required minimum distributions begin, she has six years to move pretax dollars to Roth at rates she controls. We size each conversion to keep modified adjusted gross income under the $109,000 single filer IRMAA threshold for 2026, which leaves room for roughly $45,000 to $50,000 in a typical year. One wrinkle worth naming: conversions increase how much of her survivor benefit is taxable, so the December sizing accounts for both effects together. Under conservative assumptions, an estimated $250,000 to $300,000 could potentially move to Roth before RMDs begin.

Finally we rebuilt the portfolio under our Compound Cultivator methodology, holding bonds inside the pretax accounts and equities in the taxable account and the growing Roth. Maggie gives steadily to her church, so we flagged a future mechanic: beginning at 70 and a half, qualified charitable distributions can route that giving directly from her IRA, eventually satisfying part of her RMD without the income ever reaching her return. A small lever now, a meaningful one at 73.

Projected Outcomes

A floor under the essentials: Pension plus survivor benefit is designed to cover roughly ninety percent of essential spending before any portfolio withdrawal, which is what lets the rest of the plan take measured risk.

A two step claiming plan: Survivor benefit now, her own at 70. Under current law, the switch could potentially raise her annual benefit by an estimated $5,000 per year for life compared with claiming her own benefit today.

Smaller projected RMDs: The conversion plan is designed to potentially reduce her pretax balance before 73, lowering projected required distributions and helping keep her under the single filer IRMAA threshold in her mid seventies.

Three years of insulation: About $90,000 in cash and short term bonds stands between a bad market and her spending, so a downturn changes where withdrawals come from, not how she lives.

Methodology

Maggie is a hypothetical composite illustration, and the figures are illustrative, not projections we promise. In an engagement like this, we would size the conversion each December after her income is known, confirm the benefit switch in the months before she turns 70, review the reserve level annually, and meet twice a year to check spending, health, and the plan's assumptions against reality.

Related Reading

• Why We Rarely Recommend Annuities
• 2026 Roth, 2028 Medicare
• Retirement Isn't an Age, It's a Cash Flow

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