Introduction
Tom, a 60-year-old software engineer, has spent his career building software and saving diligently. But lately, the rumor mill at work has been buzzing — layoffs might be coming. That’s left Tom wondering:
Should he dust off his résumé, or does he already have enough to retire?
In this real-life retirement case study, we’ll take a deep dive into Tom and Deb’s financial picture — analyzing their savings, income needs, Social Security strategy, and even their taxes — to see if they can confidently retire today.
The Situation: Facing Layoffs Near Retirement
Across the country, many people in their 50s and 60s are facing the same question. After decades of work, layoffs or downsizing can force you to confront your financial reality sooner than expected.
Over the past month alone, I’ve talked with more than a dozen people in this exact position — wondering whether to look for another job or finally make the leap into retirement.
Tom and Deb, both age 60, have done an excellent job preparing. They’ve saved $2 million for retirement and hope to have $8,000–$10,000 a month after taxes to live comfortably, travel, and enjoy life.
Their Financial Snapshot
Here’s what their assets look like:
-
401(k): The bulk of their $2 million nest egg is in Tom’s 401(k).
-
Brokerage Account: Built from RSUs and stock options, now worth around $500,000.
-
Roth IRA: A smaller account, but it adds tax diversification.
-
Paid-Off Home: No mortgage, meaning low ongoing housing costs.
Their financial foundation is solid — but how they use these accounts and claim benefits will determine whether that money lasts.
Income Planning: Can $2 Million Generate Enough?
Based on their goals, Tom and Deb’s plan projects a net monthly income of around $12,000 after taxes — comfortably above their $8,000–$10,000 target.
That’s great news. But it’s not just about the starting income — it’s about sustainability. We also need to account for inflation, market volatility, and rising expenses like healthcare.
Social Security Strategy
If Tom waits until age 67 to claim Social Security, he’ll receive about $4,000 per month. Deb’s benefit at 67 would be around $3,000.
But by claiming smartly, they can increase their total lifetime benefits:
-
Deb claims early at 62 for about $2,100/month — a reduced benefit, but it reduces pressure on their savings.
-
Tom delays until age 70, growing his benefit to about $5,800/month thanks to 8% annual delayed credits.
This mix allows them to preserve assets early and enjoy stronger guaranteed income later.
Stress Testing the Plan
Retirement planning isn’t about hoping for perfect market returns — it’s about preparing for what could go wrong.
Using Monte Carlo simulations (thousands of different market scenarios), Tom and Deb’s plan succeeded 94% of the time — meaning it’s highly resilient even in down markets.
In only 6% of cases, they’d need to make a small 1% spending adjustment — far below what would affect their lifestyle. Even in those scenarios, their retirement remains secure.
Tax Planning and Roth Conversions
Tom’s high-earning career means they’ve paid plenty in taxes. But retirement opens the door to new strategies.
One of the biggest opportunities: Roth conversions.
By converting portions of their 401(k) to a Roth IRA early in retirement, they can:
-
Pay lower tax rates while in a lower income bracket.
-
Reduce Required Minimum Distributions (RMDs) later.
-
Save on future Medicare IRMAA surcharges.
Over their lifetime, this strategy could save over $600,000 in taxes and reduce their average tax rate from 10.8% to 5.9%.
Health Insurance Before Medicare
Like many early retirees, one of Tom and Deb’s biggest concerns is covering health insurance between ages 60 and 65, before Medicare kicks in.
Their brokerage account helps solve this. Because withdrawals from that account aren’t fully taxable, they can control their taxable income to qualify for ACA premium tax credits — significantly reducing their health insurance costs until Medicare eligibility.
Projected Legacy
After modeling more than 35 years of retirement spending, their median outcome shows a portfolio value of $3.6 million at age 95 — even after decades of withdrawals.
In the worst-case market conditions, they’d still have over $1.3 million, and in strong markets, potentially more than $7 million.
That leaves not only lifetime security for Tom and Deb but also a meaningful legacy for their children and grandchildren.
Final Thoughts
Tom’s question started simple: “Do I need to update my résumé?”
After looking at the numbers, the answer is clear: No. He’s ready to retire.
With a balanced withdrawal plan, smart Social Security timing, and tax-efficient strategies, Tom and Deb can confidently enter the next chapter of life — one focused on freedom, family, and financial peace of mind.
Key Takeaways
✅ $2 million can comfortably support a $10K monthly lifestyle at age 60.
✅ Smart Social Security timing boosts lifetime income.
✅ Roth conversions can save six figures in taxes.
✅ Managing income for ACA credits bridges the gap to Medicare.
✅ Even conservative planning can create lasting wealth — and a legacy.
