Beacon Financial Advisors
Financial Plan Summary
John & Jane Doe
May 2026 • Prepared by Kristine McKinley, CFP, CPA
01
Overview
The Doe Family
Net Worth
$1.55M
100% invested — zero debt
Plan Success (Monte Carlo)
94%
Proposed | 99% current | 1,000 simulations
Combined Effective Tax Rate
15.85%
2025 | Federal + KS + MO
Marginal Tax Bracket
24%
$183,726 room before 32%
John Doe
Age68
StatusRetired
Military Pension (DFAS)$81,505/yr
OPM Pension (FERS)$16,901/yr
TSP$715,210
Roth IRA (Schwab)$206,857
MedicareEligible now — IRMAA Tier 2
Social SecurityClaim at age 70
Jane Doe
Age51
EmployerSpira Care
Salary$125,291/yr
Planned Retirement~2035 (age 60)
401(k)$198,144
Traditional IRA$207,315
Roth IRA$220,657
Social SecurityClaim at FRA
Strong financial foundation: zero debt, $1.55M fully invested, 94% plan success probability at $9,000/month retirement spend. Median projected portfolio at Jane age 93: ~$8.2M. Primary focus: Roth conversions, QCDs via TSP rollover, building liquidity, and international rebalancing.
02
Cash Flow
Income Picture
2026 Combined Income
$226,424
per year
| Source | Amount |
|---|---|
| Jane’s Salary (Spira Care) | $125,000 |
| Military Pension (DFAS) | $81,505 |
| OPM Pension (FERS) | $16,901 |
| TSP Distribution | $20,000 |
| Total Income | $226,424 |
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Projected Stable Retirement Income (2035)
$168,090+
per year at retirement
| Source | Annual |
|---|---|
| Military Pension (DFAS) | $101,424 |
| OPM Pension (FERS) | $50,712 |
| John SS (claim at age 70) | ~$66,666 |
| TSP/IRA RMDs (begin 2031) | $29,409+ |
| Total Stable Income | ~$168,090+ |
Projected Retirement Expenses (2035)
Living Expenses
$143,397
Annual (2035 dollars)
Health Care
$17,713
Annual
Total Outflows (incl. tax)
$188,056
Living + healthcare + est. tax $26,945
Planning Note
Retirement budget target: $9,000/month ($108,000/yr). Projected stable income of ~$168,090+ significantly offsets total outflows of ~$188,056 — portfolio withdrawal dependency is relatively low. Total lifetime retirement spending projected at $7,370,656. Optimal SS lifetime benefit of $4,343,535 — John at 70 and Jane at FRA dominates all other strategies from day one (+$68,206 vs. current filing approach). Kansas fully exempts SS from state income tax.
Social Security Optimization
| Strategy Item | Detail |
|---|---|
| John — Optimal Filing | Claim own benefit at age 70 |
| Jane — Optimal Filing | Claim at Full Retirement Age (FRA) |
| Optimal Lifetime SS Income | $4,343,535 |
| vs. Current Strategy | +$68,206 more from optimal filing |
| Break-even Analysis | No break-even — optimal dominates from day 1 |
| Kansas SS Treatment | Fully exempt from state income tax |
| Action Required | Model SS taxability (85% includable), IRMAA impact & spousal coordination before filing |
03
Investment Review
Portfolio & Balance Sheet
| Account | Owner | Balance |
|---|---|---|
| TSP | John | $715,210 |
| Roth IRA (Schwab) | John | $206,857 |
| 401(k) | Jane | $198,144 |
| Traditional IRA | Jane | $207,315 |
| Roth IRA | Jane | $220,657 |
| Total Invested Assets | $1,548,183 |
Performance vs. Benchmark (as of 3/31/26)
| Metric | Doe 2026 | Benchmark | Delta |
|---|---|---|---|
| Allocation | 67% Eq / 31% FI | 70% Eq / 25% FI | — |
| 1-Year Return | +14.13% | +16.10% | −1.97% |
| 5-Year (Annualized) | +7.79% | +7.52% | +0.27% |
| 10-Year (Annualized) | +9.47% | +9.28% | +0.19% |
| Sharpe Ratio | 0.72 | 0.67 | +0.05 |
| Ann. Volatility | 12.10% | 12.89% | Better |
| Avg. Expense Ratio | 0.15% | 0.06% | 2.5x — active mgrs |
| Avg. FI Duration | 4.37 yrs | 6.40 yrs | Defensive |
| FI Yield to Maturity | 3.76% | 4.28% | −0.52% |
| Downside Capture | 68.91% | 73.03% | Better |
| ESG Score (0–10) | 6.51 | 6.55 | Matched |
| Carbon Intensity | 122.06 | 133.56 | Lower — positive |
Total Net Worth
$1.55M
Debt
Zero Debt
100% invested assets
Liquidity ?
✗ $0 current vs. $25,428 target
✗ 3-month expense gap — priority action
5-Year Ann. Return
+7.79%
Benchmark: +7.52%
10-Year Ann. Return
+9.47%
Benchmark: +9.28%
Sharpe Ratio
0.72
vs. 0.67 benchmark
Ann. Volatility
12.10%
vs. 12.89% benchmark
Asset Allocation vs. Benchmark
| Asset Class | Doe 2026 | Benchmark | Delta |
|---|---|---|---|
| Total Equity | 66.92% | 71.78% | −4.86% |
| US Stock | 54.17% | 46.95% | +7.22% |
| Non-US Stock ? | 12.75% | 24.83% | −12.08% |
| Total Fixed Income | 30.59% | 24.85% | +5.74% |
| US Bond | 28.58% | 24.61% | +3.97% |
| Non-US Bond | 2.01% | 0.24% | +1.77% |
| Cash & Other | 2.50% | 3.38% | −0.88% |
Sector Allocation vs. Benchmark
| Sector | Doe 2026 | Benchmark | Delta |
|---|---|---|---|
| Technology | 28.30% | 29.73% | −1.43% |
| Financial Services | 14.86% | 15.39% | −0.53% |
| Industrials | 11.47% | 10.88% | +0.59% |
| Healthcare | 9.97% | 7.99% | +1.98% |
| Consumer Cyclical | 9.19% | 9.43% | −0.24% |
| Comm. Services | 8.59% | 8.92% | −0.33% |
| Consumer Defensive | 5.52% | 4.94% | +0.58% |
| Energy | 4.14% | 4.08% | +0.06% |
Portfolio Recommendations
1. Increase International Diversification
Non-US Stock is 12.75% vs. benchmark 24.83% — the largest active deviation. US equity stands at 80.93% vs. 65.41% benchmark. Consider gradually adding VEA or a broad international ETF to reduce home-country concentration risk.
2. Review Bond Duration & Yield
Average FI duration is 4.37 yrs vs. benchmark 6.40 yrs; YTM 3.76% vs. 4.28%. VFISX (13.37% of portfolio) dominates fixed income. Consider extending into VBTLX or adding to DODIX given their long horizon and income needs.
3. Monitor Small Cap Overweight
Small cap at 4.66% vs. 1.87% benchmark (VEXAX 2.48% + WSMDX 1.27%). WSMDX 5-yr return is 1.81% against a 0.99% expense ratio — confirm this tilt is intentional and still aligned with risk tolerance.
4. Expense Ratio — Currently Justified
Active managers (VWELX 0.24%, DODIX 0.41%, WSMDX 0.99%, MIEIX 0.64%) are currently earning their fees — superior Sharpe ratio (0.72 vs. 0.67) and outperformance over 5 and 10 years. No action needed; review annually.
04
Long-Term Plan
Retirement Roadmap
Monthly Retirement Budget
$9,000
Proposed plan — $108,000/yr
Median Portfolio at Jane Age 93
~$8.2M
94% success at proposed spend
Total Lifetime Retirement Spending
$7.37M
Through end of plan
Projected Portfolio Value
| Year / Age | Projected Portfolio | Notes |
|---|---|---|
| 2026 (68/51) — Today | $1,668,717 | Jane working. Roth conversions begin. Build liquidity. |
| 2030 (72/55) | $2,229,742 | John RMDs begin at age 73 (2031). SS claiming decision. |
| 2035 (77/60) — Jane Retires | $3,081,361 | Super catch-up window (60–63). $9,000/mo budget activates. |
| 2040 (82/65) | $3,829,227 | Both retired. Stable pension + SS base. Portfolio growing. |
| 2050 (—/75) | $5,498,036 | Medicare/IRMAA management ongoing. |
| 2060 (—/85) | $7,093,098 | Strong legacy position building. |
| 2070 (—/95) — End of Plan | $7,169,150 | Median ~$8.2M. Plan success 94%. |
Key Milestones
2026
John 68 / Jane 51
Now — Portfolio $1,668,717
Jane working at Spira Care. Begin systematic Roth conversions up to $183,726 in 24% bracket. Initiate TSP→IRA rollover to enable QCDs. Build $25,428 emergency fund. International rebalancing.
2028
John 70
John Claims Social Security
John files for SS at age 70 — ~$66,666/yr. Optimal strategy dominates from day 1. Model IRMAA impact and SS taxability (up to 85% includable) before filing.
2031
John 73
John RMDs Begin — Portfolio ~$2.2M
TSP/IRA Required Minimum Distributions begin at age 73 (SECURE 2.0). Projected $29,409+/yr. Roth conversion window narrows — front-load conversions in prior years to reduce RMD burden.
2035
John 77 / Jane 60
Jane Retires — Portfolio $3,081,361
$9,000/month retirement budget activates. Jane’s super catch-up window (ages 60–63) begins — max contributions in final working years. Military pension inflation-adjusted to $101,424 + OPM $50,712.
2035+
Jane FRA
Jane Claims Social Security at FRA
Spousal benefit coordination complete. Optimal lifetime benefit: $4,343,535 combined. Kansas fully exempts SS from state income tax.
2070
Jane 95
End of Plan — Projected Portfolio $7,169,150
Median portfolio ~$8.2M at Jane age 93. 94% plan success. Total lifetime spending $7,370,656. Strong legacy position for heirs — inherited IRA 10-year rule planning critical.
05
Tax Strategy
Tax Analysis & Planning
2025 AGI
$244,315
MFJ | 5 income sources
Federal Effective Rate
13.96%
Marginal bracket: 24%
Combined Tax Liability
$38,719
Fed + KS + MO | 15.85%
Net Refund
$1,285
Fed $318 + MO $1,388 − KS $421
2025 Income Sources & Taxability
| Source | Amount | Federal Taxable? |
|---|---|---|
| Jane’s Wages (Spira Care) | $125,291 | Yes |
| Military Pension (DFAS) | $81,505 | Yes (KS exempt) |
| OPM Pension (FERS) | $16,901 | Yes (KS exempt) |
| TSP Distribution | $20,000 | Yes — KS NOT exempt |
| Interest Income | $618 | Yes |
| Roth IRA Distribution (Schwab) | $36,473 | Tax-Free |
| Total Income / AGI | $244,315 |
State Tax Summary
| Item | Kansas | Missouri |
|---|---|---|
| State AGI | $142,309 | $121,750 |
| Gross Tax | $5,868 | $3,620 |
| Credits / Offsets | −$4,881 | MO credit N/A |
| Net Tax | $987 | $3,620 |
| Withheld | $566 | $5,010 |
| Result | $421 Due | $1,388 Refund |
Tax Planning Priorities
HIGH: Roth Conversion Strategy in 24% Bracket
$183,726 of room remains in the 24% bracket before hitting 32%. Systematic Roth conversions now reduce future RMDs, lower IRMAA exposure once SS is claimed, and build tax-free wealth. The 24% rate is likely favorable relative to future rates. Also reduces the inherited IRA tax burden for beneficiaries under the 10-year depletion rule.
HIGH: Qualified Charitable Distributions (QCDs) via TSP Rollover
John is 70½+ and eligible for QCDs. Rolling TSP to a Traditional IRA enables QCDs up to $105,000/year (2025, indexed to inflation), converting $4,900 in charitable gifts into above-the-line deductions — saving ~$1,176/yr federal + KS tax + IRMAA management. TSP does not allow QCDs directly. Coordinate with the new $2,000 above-the-line charitable deduction (OBBBA): QCDs reduce AGI (better for IRMAA); the $2,000 deduction applies only to non-QCD cash gifts.
MEDIUM-HIGH: IRMAA Surcharge Exposure (2027 Impact)
2025 MAGI of $244,315 exceeds the projected 2027 Tier 2 IRMAA threshold (~$222,000 MFJ). John will likely pay ~$1,037/yr in Medicare surcharges. Levers: QCDs (reduce AGI directly), maximizing Jane’s pre-tax 401(k) contributions, and managing TSP distribution timing.
MEDIUM: 2026 Child Tax Credit Loss
Jamie turns 17 in February 2026, eliminating the $2,200 Child Tax Credit. She may qualify for the $500 Other Dependent Credit — a net loss of ~$1,700. Plan for higher 2026 withholding or estimated tax payments to avoid underpayment.
MEDIUM: Jane’s Retirement Savings Optimization
Jane earns $125,291. Maxing pre-tax 401(k) ($23,500 + $7,500 catch-up if 50+), Backdoor Roth IRA ($7,000), and HSA if HDHP-eligible ($8,550 family) could shelter up to $39,050 — directly reducing IRMAA exposure and KS taxable income.
POSITIVE: OBBBA Senior Bonus Deduction (2025–2028)
The One Big Beautiful Bill Act introduces a $6,000/person above-the-line deduction for age 65+, phasing out at $75,000 single / $150,000 MFJ MAGI. At $244K MAGI, John’s benefit is 94% phased out — approximately $341 remains. The new $2,000 above-the-line charitable deduction (MFJ, for non-QCD cash gifts starting 2026) is fully applicable and provides their first federal tax benefit from cash charitable giving. Note: all OBBBA provisions expire after 2028.
06
Regulatory Context
Key Federal Legislation
SECURE Act 1.0 Enacted Dec 2019
Purpose: Expand retirement savings access and modernize distribution rules.
Key provisions for retired clients:
Key provisions for retired clients:
- RMD age raised from 70½ to 72 — delays required distributions, extends tax-deferred growth
- Stretch IRA eliminated — most non-spouse beneficiaries must fully deplete inherited IRAs within 10 years
- Age limit for Traditional IRA contributions removed — contributions allowed at any age with earned income
- QCD rules unchanged — available at age 70½, up to $100,000/year
- Part-time worker access to 401(k) plans after 3 years of service
Doe Household Impact: The 10-year rule now applies to beneficiaries of their TSP and IRA balances. Beneficiaries face significant income tax acceleration on inherited accounts — consider estate planning and Roth conversion strategies now to reduce the inherited tax burden.
SECURE Act 2.0 Enacted Dec 2022
Purpose: Build on SECURE 1.0 with broader retirement security improvements.
Key provisions for retired clients:
Key provisions for retired clients:
- RMD age raised to 73 (effective 2023), then 75 (effective 2033 for those born 1960+) — significantly extends the Roth conversion window
- RMD penalty reduced from 50% to 25% (10% if self-corrected within 2 years)
- Roth employer accounts (401k/403b) no longer subject to RMDs during the owner’s lifetime (starting 2024)
- QCD limit indexed to inflation — $105,000/person in 2025, growing annually
- Super catch-up contributions for ages 60–63: Greater of $10,000 or 150% of standard catch-up, indexed for inflation
- 529-to-Roth IRA rollovers allowed after 15-year holding period (lifetime cap: $35,000)
- Surviving spouse RMD election — can choose to be treated as deceased spouse for distribution purposes
Doe Household Impact: John (born ~1957–58) hits RMD age at 73 — TSP/IRA RMDs begin 2031. QCD limit of $105K supports charitable strategy. Jane (age 51) benefits from super catch-up contributions starting at age 60 (2035 — coinciding with her retirement target).
OBBBA — One Big Beautiful Bill Act 2025 | Expires 2028
Purpose: Extend and modify TCJA provisions with new benefits for seniors, non-itemizers, and families.
Key provisions for retired clients:
Key provisions for retired clients:
- Senior Bonus Deduction: $6,000/person age 65+ as an above-the-line deduction; phases out at $75,000 single / $150,000 MFJ MAGI
- $2,000 Above-the-Line Charitable Deduction (MFJ): Non-itemizers may deduct up to $2,000 in annual cash charitable gifts
- $40,000 SALT Cap: Increased from $10,000 — modest relief for clients with high state/local tax exposure
- Enhanced Standard Deduction: Maintains TCJA-level, which continues to exceed itemized deductions for most retirees
- Child Tax Credit at $2,200: Per qualifying child under 17, with phase-out rules
- Sunset Provision: All OBBBA provisions expire after 2028 — long-term planning must not assume permanent availability
Doe Household Impact: Senior bonus deduction is 94% phased out at $244K MAGI — only ~$341 remains. The $2,000 above-the-line charitable deduction (starting 2026) is directly applicable and provides their first federal tax benefit from charitable giving. Coordinate with QCD strategy: QCDs reduce AGI (better for IRMAA), while the $2,000 deduction applies only to non-QCD cash gifts.
07
Action Plan
Next Steps
01
Initiate TSP → Traditional IRA Rollover
Enables QCDs up to $105,000/yr, converting $4,900 in charitable gifts into above-the-line deductions (~$1,176/yr savings). TSP does not allow QCDs directly — rollover is a prerequisite for this strategy.
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02
Model & Execute Roth Conversion Strategy
Systematically convert up to $183,726 within the 24% bracket annually. Reduces future RMDs, IRMAA exposure, and inherited IRA tax burden for beneficiaries under the 10-year depletion rule.
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03
Build Emergency Fund — $25,428 Target
Current liquidity is $0 vs. a 3-month expense target of $25,428. Address this gap before retirement — only unaddressed financial vulnerability in an otherwise strong plan.
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04
Model Social Security Claiming Decision Before Filing
John is eligible now (age 65+). Must model SS taxability (up to 85% includable), IRMAA impact, and spousal benefit coordination before filing. Optimal: John at 70, Jane at FRA = $4,343,535 lifetime benefit, +$68,206 vs. current strategy.
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05
Increase International Equity Diversification
Non-US Stock is 12.75% vs. 24.83% benchmark — largest active deviation. Gradually add VEA or a broad international ETF to reduce home-country concentration risk.
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06
Maximize Jane’s Pre-Tax Contributions
Max 401(k) ($23,500 + $7,500 catch-up if 50+) + Backdoor Roth IRA ($7,000) + HSA if HDHP-eligible ($8,550 family) = up to $39,050 sheltered. Directly reduces IRMAA exposure and KS taxable income.
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07
Review Bond Duration & Extend if Appropriate
Current FI duration 4.37 yrs vs. benchmark 6.40 yrs; YTM 3.76% vs. 4.28%. Consider extending into VBTLX or adding to DODIX given long investment horizon and retirement income needs.
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08
Estate Planning Review — Inherited IRA Strategy
The SECURE 1.0 10-year depletion rule applies to beneficiaries of TSP and IRA balances. Roth conversions now reduce the taxable balance heirs must drain within a decade. Review estate documents and beneficiary designations.
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