A Couple Who Retires at 60 With $700,000 in Two 401(k)s and Lives on His Pension for 13 Years Will Meet About $50,000 of Required Withdrawals at 73, on Top of the Pension

Picture a couple who retire at 60. His pension pays the bills, so their two 401(k)s, worth $700,000 combined, stay put. For 13 years, nothing about their money feels urgent. Behind that calm, though, two things grow quietly: the account balances and the tax bill that shows up once required withdrawals start at 73. Here is how a pension changes the usual advice for those in-between years and which strategies suit a pension household instead.

A Pension Fills the Brackets Conversion Advice Assumes Are Empty

Required minimum distributions, or RMDs, are the annual withdrawals the IRS makes you take from traditional retirement accounts. Under current rules, they start when you turn 73. Standard advice says to use the years before that for Roth conversions, meaning you pay tax now so later withdrawals are tax-free, while your income is low. That plan assumes your taxable income is low, and a pensioner’s isn’t.

According to IRS Publication 554, pension income is generally fully taxable if you didn’t put after-tax money into the plan. Assume his pension pays $100,000 a year. After the 2026 joint standard deduction of $32,200, that leaves $67,800 of taxable income before anyone touches a 401(k).

Couples filing jointly see the 10% bracket end at $24,800 and the 12% bracket end at $100,800. That means the pension has already used up the bottom bracket and most of the next one, leaving just $33,000 of room at 12%. It takes that space again every year, whether the couple needs the income or not.

A cost-of-living adjustment changes how this plays out. Some pensions raise payments periodically, while others pay a flat amount. Brackets are indexed to inflation, so a flat pension slowly shrinks against them and gradually frees up room, while a pension that grows with inflation keeps filling the same space for life.

What 13 Untouched Years Build

Assume a 5% annual return and no withdrawals. With that return, the $700,000 grows to about $1.32 million by age 73. Divide that by the IRS Uniform Lifetime Table factor of 26.5, and the first RMD comes to roughly $49,810.

Social Security benefits then add to that income. Assume the couple’s combined benefits are $40,000 by then. Once a joint filer’s combined income passes $44,000, up to 85% of benefits become taxable, and a six-figure pension tops that line on its own. The pension, RMD, and taxable benefits total about $183,810.

Using today’s figures, the extra standard deduction of $1,650 per married spouse 65 or older leaves about $148,310 of taxable income. That puts the top of the RMD in the 22% bracket, which runs to $211,400 when a couple files jointly. Their pension used up the lower brackets first.

Medicare Surcharges Can Bind Before the Brackets Do

Medicare’s income-related monthly adjustment amount, or IRMAA, is an extra charge. It adds to Part B and Part D premiums once joint modified adjusted gross income exceeds $218,000 in 2026. It’s based on your tax return from two years earlier, and each spouse on Medicare pays it separately.

In this model, the couple’s income sits about $34,190 below that line before any conversion. A bigger conversion, or several years of pension raises, could push them over, and for a pension household, the surcharge may just be part of the cost of having the pension. A spouse’s death can later lower income. Social Security Form SSA-44 lets you request a reduction after such a life-changing event.

When One Spouse Is Left

Many pensions pay a reduced benefit to the surviving spouse. This happens under a joint-and-survivor option, and spouses generally must give written consent to waive their rights. A widow files as single, with a 2026 standard deduction of $16,100.

Her 24% bracket starts at $105,700, and her IRMAA line is $109,000. Her pension may shrink, but the RMDs on the combined balance stay just as large.

Moves That Still Work for Pensioners

• Qualified charitable distributions. From age 70½, IRA owners can send up to $111,000 to charity in 2026. The gift counts toward the RMD and is excluded from income, but you must roll 401(k) money into an IRA first.
• Spend from the accounts early. Living partly on 401(k) withdrawals in your 60s, even without converting, shrinks the balance the first RMD is calculated on.
• Convert into 22% on purpose. That makes sense when the alternative later is 22% plus a Medicare surcharge, or 24% as a widow.
• Coordinate both accounts. Each spouse’s RMD depends on their own age and balance, so decide whose account to draw down first.
• Rethink the Social Security claiming date. Delaying keeps benefits out of your 60s brackets, but larger checks later add pressure.

Calculation to Run Each Autumn

A pension provides steady income. Advice written for retirees without one needs adjusting for a pension household. Each fall, add up your income sources. Subtract the standard deduction, then see how much room you have under your chosen bracket and the IRMAA line that will apply two years out. If the answer is close to zero, plan around the RMDs. If there’s room, you can use that space until December 31.

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