Prepared for Alan and Ruth Sutton
The three years before Medicare, and the thirty after
Prepared July 25, 2026. Account values as of July 17, 2026.
One
Your savings tested against 400 different market histories. The dark line is the middle result; the shaded areas are the better and worse outcomes around it.
Spending falls naturally with age, so the plan uses three stages. Each card shows two recommendations because the right number depends on one choice, explained in section three.
How to handle 2026 and 2027
Two
Three years with more decisions in them than the thirty that follow. Alan's Social Security still seven years away, health insurance at the most expensive age to buy it, and two income limits worth real money.
Not what you spend. It is what the government counts: withdrawals from the IRA, the taxable part of Social Security, and investment income. Money from your trust barely counts, because it has already been taxed. That is why the order we draw from your accounts matters so much.
Through 2027, the insurance discount. Keep counted income under $84,600 and the government covers most of your premium. One dollar over and you lose all of it, so we aim well under the line rather than at it. The plan holds you under it in both 2026 and 2027, worth roughly $53,000 of premium across the two years.
From 2028, the Medicare surcharge. Medicare charges higher earners more, based on income from two years earlier. So 2026 sets your 2028 premiums, 2027 sets 2029. Crossing this line costs about $2,500 for one year, uncomfortable but not a cliff.
Your income each year against the limit that applies
How we build the 2026 number
Your living trust has no built-up gain, so selling from it adds almost nothing to counted income. That is what leaves room to take about $63,700 out of the IRA this year at a rate near zero while still collecting the discount. It is the cheapest money you will ever move out of that account. There is no health account line for 2026, because your current plan does not qualify for one. That starts in 2027.
A rule change in January made every Bronze and Catastrophic marketplace plan work with a health savings account. Retirement does not disqualify you; only Medicare does, which is why the window shuts in 2028. Your current plan is not one of these, so 2026 is unavailable, but moving to Bronze at renewal opens 2027 and part of 2028. It helps three ways at once:
Money in, money out
What it can pay for
Eligibility starts with your 2027 plan and ends when Medicare does: May 1, 2028 for Alan, October 1, 2028 for Ruth, prorated for the months each of you qualifies.
What health care costs you each year
Each bar is the full cost of cover, and the colours show who pays it. In 2026 and 2027 the pale band is the discount, and in 2027 it covers a Bronze plan almost entirely, which is why your own share falls to near nothing. The expensive year is 2028, when you buy part of a year of private cover and part of a year of Medicare at once. From 2029 the green band is Part B and D paid straight from the health account, so it never leaves your savings.
Taking the discount in both years saves about $36,600 of tax and $29,800 of premium across the first five years. It costs about $51,000 more in lifetime tax, because income deferred now is taxed later, and it spends about $54,000 of the Roth in 2027. That is the right trade: the saving is certain, it lands in the years your savings are most vulnerable, and the conversion ladder rebuilds the Roth from 2028. Skipping the discount cuts lifetime tax the most, but only by taking extra out in the years that can least afford it.
Three
Ruth's benefit covers about $12,680 a year. Everything else, until Alan claims at 70, comes out of your savings. The share you draw starts modestly at 5.4 percent, then climbs through the bridge and peaks above 8 percent just before his benefit arrives. That is the stretch where market returns matter most, and what makes it workable is agreeing in advance what happens if they disappoint.
How much of your savings you spend each year
Once a year, at your review, we compare what you actually have to what this plan expected you to have by then. One of three things follows.
Cuts stop after 20 percent, increases after 15 percent. So across every future in this plan, your spending stays between roughly $139,200 and $200,100 in today's money.
We can tell you the rule takes $1,160 a month off your spending. We cannot yet tell you which $1,160, because we do not have a breakdown of what you actually spend. Everything in this plan is estimated from the money leaving your accounts, which tells us the total and nothing about the shape.
That gap has to close before the rule means anything. What we need to do together, and soon, is take your real spending apart and sort it into three buckets: what is fixed and untouchable, what is comfortable but flexible, and what is genuinely discretionary. Then we agree the order things come off in, write it down, and both sign up to it.
Agreed in advance, applied without exception. When the rule fires, we do not reopen the conversation, we work the list. That is the whole reason for deciding it now, on a calm afternoon, rather than in the middle of a falling market when every line item suddenly feels essential. A rule with a negotiation attached is not a rule, and the odds in this plan quietly assume you have one.
What "15 percent below plan" actually means in dollars
These are the numbers we check against at each review, using your December 31 balances. Nothing is judged in the moment or in the middle of a bad month.
You start 2026 with about $3.23 million. Over the year roughly $175,000 leaves the portfolio to cover spending and tax, and markets fall 20 percent. You end the year near $2.45 million, against a plan expectation of about $3.31 million. That is 26 percent below, so the rule fires: 2027 spending is set at about $164,000 instead of $178,350. If 2027 recovers, the cut comes off. If it does not, another step follows.
This is worth being blunt about, because "if markets go against you" makes it sound rare and it is not. A single poor year early on is enough to put you 15 percent behind, and across a 35-year projection with a draw that reaches 8 percent, ordinary market variation gets you there sooner or later. Across all the futures in this plan:
Read that honestly and it changes how you should hear the recommendation. This is not a plan that occasionally needs a nudge. It is a plan that expects to be adjusted, probably more than once, and in most futures it works its way down to the floor at some point. That is the deal you are being offered, and it is a reasonable one, but only if you go in knowing it.
The alternative is simple: set spending at about $147,000 now, permanently, and never be asked to adjust again. That lands you in much the same place on the odds, 82% with the rule at today's spending against your 80 percent target without it. The difference is where the spending sits over time.
Both figures are in today's dollars, over the whole projection, in the middle outcome. Without the rule your odds fall to 49% at your current spending, which is why the fixed alternative has to start lower.
So the trade is this. Start higher, spend meaningfully more through your sixties and seventies while you are most able to enjoy it, and accept being asked to step down when markets disappoint, possibly to a little under the fixed figure in your late eighties. Or start lower, spend less in the years you are most active, and never have the conversation. Neither is wrong. It is a question of which you would rather live with, and it is the one decision on this plan we cannot make for you.
Everything above assumes the step down actually happens when it triggers. A rule that gets talked out of in the moment is worse than no rule, because you will have spent the extra money in the good years without taking the medicine in the bad ones. If you would not follow it, tell us now and we will build the plan at the lower fixed figure instead.
Four
Roughly $3 million sits in the IRA and none of it has been taxed. That bill gets paid by you, by whichever of you is left, or by your children at their own rates. The only question is when, and at what rate.
So each year we move a slice into the Roth and pay the tax deliberately, sized to fit inside the 22 percent bracket. It is never taxed at a higher rate than the one we are avoiding later, and once it is in the Roth it grows and comes out tax free.
How much we move each year
Nothing moves in 2026 or 2027, when income is already being managed for the discount.
The third row counts the IRA at 76 cents on the dollar, because the tax owed on it is real even if unpaid. On that basis this is worth about to you.
In some years a slice pushes income over the Medicare surcharge line and adds a couple of thousand dollars two years later. Worth it: a one-year surcharge in the thousands buys a permanent rate cut on six figures.
Five
Alan holds the large IRA and the larger benefit, so his dying first changes the most.
Modeled as Alan dying at 73, the survivor spending 80 percent of the joint figure and keeping the larger benefit.
Income does not halve but the tax brackets do, and the Medicare surcharge line drops from $218,000 to $109,000. The same money and lifestyle produce a much bigger tax bill, so the risk is the rate, not running out. That is why Alan waits until 70, locking in the largest possible benefit for Ruth for life, and why moving money to the Roth now matters: of the survivor's tax disappears if it happens while you are both here.
Ruth draws her own $12,680 today. When Alan claims at 70 she becomes entitled to a top-up of roughly $6,500 a year for life, paid automatically once he files. It is worth about by the end, and it is easy to overlook because nothing prompts you to claim it.
Six
Not average returns. These two. Both are carried in every number here rather than left out.
The first chart has a shaded band around age 88 and the lines dip through it. This is why.
What we assumed
Where the figures come from. The 2025 national cost of care survey. Your state runs well below the national average: a semi-private nursing home room is about $84,315 a year, assisted living $73,800, memory care $92,400, against a national private-room median of $129,575. We used $100,000 for a private room close to home. Normal spending drops a quarter during those years because a facility already covers food and housing.
Why 4 percent and not 2.5. Care has not tracked general prices. We use 4 percent for care and 5 percent for insurance premiums because they behave differently. It is the most consequential number in this section: the picture improves noticeably at 3 percent and worsens at 5. Using general inflation for premiums too would flatter your odds by about .
What those years look like
Ordinary years shown for comparison. Look at the last column: you go from taking 4.6% of your savings in a normal year to 17.3% in the third year of care.
Why the chart dips, in one sentence. For three years your spending roughly doubles while your savings stay the same size, so the share you have to take out each year more than triples, and the money taken out in those years is no longer there to grow back afterwards. The line never fully returns to where it was heading.
Care itself comes to $832,167 across the three years. But the household needs $1,892,899 in total over that stretch, and about $246,680 of that is extra tax, created purely because a sum that large has to come out of a pre-tax IRA in a single year and lands in the highest brackets you will ever touch. Roughly $34,000 of higher Medicare premiums follows two years behind it. Your savings fall about $818,000 across the period.
So a care bill near $832,000 costs closer to $1.1 million. That gap is the best argument for everything in section four: the smaller the pre-tax IRA is by 88, the cheaper a bad year becomes.
How much it depends on what actually happens
Duration matters far more than timing: starting at 82 rather than 88 barely moves the result, lasting five years rather than three moves it a lot. Carrying the assumption at all costs about of your odds.
What we are doing about it. Not buying a policy today. The Roth is the reserve, which is exactly why the conversion ladder matters: it is quietly building the account we would draw on. We look at insurance again at 70, while price and health still work in your favor.
Selling investments to live on while markets are down is the hardest thing to recover from, because those shares are gone and never participate in the rebound. It is worst in the years before Alan claims, when your savings are carrying almost all of your spending.
Two answers, both already in the plan: keep the next 18 to 24 months of spending in cash and short bonds so no withdrawal is ever forced at a low, and use the spending rule in section three, which exists for precisely this.
Seven
Eight
Accounts, July 2026. IRA $2,983,326 (Alan $2,850,752, Ruth $132,574). Trust $159,064, a living trust with no material built-up gain. Roth $89,851. Health accounts start at zero.
Spending. Estimated from your withdrawals over the past two and a half years, after tax withheld and health premiums. Recurring large items left in; the one-off 2025 gift removed and treated as pre-funding five years of giving. Steps to 85 percent at 75 and 75 percent at 85.
Care. Three years from age 88 at $100,000 a year in today's money, rising 4 percent, with normal household spending reduced 25 percent during those years. Based on 2025 cost of care survey medians for your state, where a semi-private nursing home room is about $84,315 a year and assisted living about $73,800, against a national private-room median of $129,575.
Markets. 400 simulations at the average return shown with 12 percent year-to-year variation. Inflation 2.5 percent, health costs 5 percent.
Health care. Your state's 2026 marketplace medians, age-rated for a couple at 63: benchmark Silver about $33,500 a year, lowest-cost Bronze about $25,600. The discount equals the benchmark premium less your required share, taken as about 10 percent of income under the rules that returned for 2026, and it applies to whichever plan you buy. Silver for 2026, Bronze from 2027. Health savings account contributions run from 2027 to the month each of you reaches Medicare. Out-of-pocket medical costs are not a separate line; they sit inside the living expense figure, which came from your actual withdrawals. Medicare from 2028 at published 2026 rates: Part B $202.90 a month, Part D $34.50, supplement $158, plus the surcharge where income two years earlier crossed the line, with the line rising 2.5 percent a year.
Tax. 2026 federal brackets and the $32,200 joint standard deduction, both indexed; the extra deduction at 65 and the temporary $6,000 senior deduction each through 2028, phasing out above $150,000; 85 percent of Social Security taxable; dividends and long-term gains at their lower rates. Your state at the 4.5 percent top rate effective for 2026, $10,000 of retirement income excluded each, Social Security untaxed. Required IRA withdrawals begin at 75.
Social Security. Alan deferred to 70 at $61,068, per his statement dated July 21, 2026. Ruth drawing $12,680; her full retirement amount is estimated from that pending her statement. Neither of you has earned income now or plans to.
Still moving. The 2027 discount rules are unsettled. The enhanced version lapsed January 1, 2026 and the $84,600 cliff returned, which this plan assumes. A three-year extension passed the House in January and the Senate compromise stalled. If a version passes that caps premiums as a share of income instead of cutting them off at a cliff, the whole exercise of managing income to a line disappears: you would keep the discount without constraining withdrawals, and 2026 and 2027 would be rebuilt around filling low tax brackets instead. That would be a better outcome than the one modelled here, not a worse one.
These are estimates, not predictions. Every figure moves with the assumptions above.