Every Dollar with a Job - A Five-Slice Retirement Income Case Study

Ben and Marie came to me earlier this year, both newly retired, both in their mid-sixties.

One had just closed out a long corporate career with a pension attached. The other had just closed out a long career in education. They spend extended stretches of the year overseas.

The picture: about $1.7 million in retirement savings, spread across a rollover IRA, a workplace plan, an inherited IRA, and a modest pile of individual stock and cash. Pension and Social Security arriving automatically, plus two small annuitized contracts already running. Analytical, fee-conscious, used to running their own money through a single long-time provider. Plenty of assets. No plan shape.

They came in sounding like people with a complaint about their provider. What they had was a complaint about the shape of their plan. The portfolio was in pieces, and no one had ever assembled the sentence that says which dollars pay for which parts of their life in which year. That sentence is the entire output of a retirement income plan.

Underneath the presenting frame was the sharper question, and it’s the one this case turns on. Where is our paycheck going to come from?

The Income Plan

The framing move came first. Before designing any single piece of the structure, we laid the whole portfolio on one page and measured the distance between what arrives automatically and what their life actually costs. Roughly $2,700 a month, uncovered. Every decision after that gets built to close that gap and to carry what stacks behind it.

The right shape was five slices, sequenced. Each slice is one decision, and the whole portfolio gets re-shown after every one with a single new slice filled in. The household watches the plan assemble instead of being handed a finished thing to accept.

Slice 1 — the income floor.

Solve the $2,700-a-month gap with guaranteed lifetime income. Roughly $320,000 into a guaranteed income annuity, structured as four equal contracts rather than one. Action: four contracts, joint continuance where appropriate, staged activation preserved. Why: income can be switched on in stages or left off entirely, and households switch on different pieces at different ages depending on how the rest of the plan performs. The single-contract version surrenders that choice on day one. Trade-off: $320,000 leaves the market-exposed column permanently, in exchange for income neither spouse can outlive.

Slice 2 — the bridge.

The guaranteed income is designed to begin about five years out. Something has to cover the years in between. Action: fund the bridge from the inherited IRA, plus roughly $150,000 in a three-year guaranteed annuity at a locked rate. Why: the inherited IRA is the household’s most constrained dollar — no conversion optionality, forced depletion under the ten-year rule, no strategic use later. Spending it first is a design choice, not a default. Trade-off: the account with the least flexibility drains first, which is exactly what preserves flexibility everywhere else.

Slice 3 — the inflation offset.

A guaranteed paycheck is level for life. Their cost of living is not. Action: roughly $183,000 into a long-horizon growth allocation, funded over time by annual Roth conversions so the growth and the eventual withdrawals come out tax-free. Why: a level floor solves sequence-of-returns risk on that slice and does nothing about rising prices. Trade-off: this slice sits in market exposure and earns its return without a floor of its own.

Slice 4 — the protected growth.

About $500,000 into principal-protected growth, market participation with a floor, doing the job a bond allocation used to do. Action: size the slice to bridge the guaranteed floor and the growth-oriented inflation slice. Why: this slice exists in the design only because Ben and Marie bought long-term care coverage years ago. Without that coverage, the same $500,000 would have had to sit in reserve against a care event. A decision they made years before they met me is what earned this slice a job. Trade-off: participation is capped at the level the floor requires. The household gives up some of the market’s best years to keep from ever giving up the floor.

Slice 5 — the tax bracket.

A modest annual Roth conversion running about seven years, with the tax bill named as its own slice up front instead of arriving as a surprise. Action: size each year’s conversion to the bracket headroom the plan produces. Why: the tax on a deliberate conversion is a known cost, and a plan is stronger when a known cost is priced in as capital rather than absorbed as friction. Trade-off: tax paid now, at today’s rates, on money that doesn’t have to move yet — a trade this household can make with confidence because the bracket math is knowable rather than guessable.

With all five slices in place, the design gives every dollar a job, and the paycheck starts before they need it rather than after. The projection also cuts the household’s forced retirement withdrawals at 75 substantially.

Two takeaways for our work.

The first is one of the quietest sequencing insights in this profession, and it’s the one this design turns on. The order in which accounts get spent matters as much as the order in which they were filled. Ben and Marie’s most constrained account — inherited, must be emptied, cannot be converted, no flexibility of any kind — was exactly the right one to spend first. Spending it early protects the accounts that still have choices attached: the ones that can be converted, grown, or left alone. Most households do the reverse by instinct, drawing from whatever is easiest to reach, and arrive at seventy-five with every option already used. Run the constrained-account-first analysis on every household whose income plan is still in draft.

The second deserves its own piece. A guaranteed paycheck is level for life, and a level paycheck is precisely what creates an inflation problem. Buy the income, ignore that, and you’ve built half a plan. The step that solves income is the step that creates the next step. That’s why the five slices are a stack and not a menu — the order isn’t optional, and every solution is entangled with the problem it surfaces.

Hypothetical case study based on a real planning engagement; identifying details have been changed. The plan discussed is a proposed retirement income structure at draft stage — not yet fully implemented — and every figure shown is a design projection on that proposed plan, not a result achieved by any client. Outcomes shown are illustrative and depend on assumed rates of return, tax law, insurance underwriting, and household-specific circumstances. Guaranteed-income and principal-protection features described are subject to the claims-paying ability of the issuing insurance carrier. Roth conversion figures are illustrative only and are not tax advice; conversion decisions should be reviewed with the client’s own tax professional. Product categories only are described; no carriers or products are named. Past performance is not indicative of future results.