Monthly pension or IRA rollover for a married couple?
Kevin and Amy are a fictional couple comparing Amy's lifetime monthly pension with a $275,000 lump sum rolled into her Traditional IRA.
Written by James Wilson · Calculated and reviewed August 10, 2026
Starting plan inputs
| Household | Kevin, 63, and Amy, 60; married filing jointly in Oregon |
|---|---|
| Traditional IRAs | Kevin $525,000; Amy $185,000 |
| Roth IRAs | Kevin $65,000; Amy $40,000 |
| Taxable savings | $75,000 shared |
| First-year spending | $74,000 |
| Social Security | Both claim at 67; Kevin's age-67 estimate is $2,900 monthly and Amy's full-retirement-age amount is $2,050 |
| Monthly-pension version | Amy receives $1,650 monthly from age 65, fixed with no COLA; 50% continues to Kevin |
| Rollover version | Remove the pension and add a $275,000 future Traditional IRA rollover owned by Amy early in 2030 |
| Shared assumptions | Balanced allocation, Lower Long-Term Returns, 2.5% inflation, no Roth conversions, healthcare included in spending, Simple Deterministic Medicare, and projection through Kevin's age 95 |
| Dollar reference | Social Security estimates and first-year spending are entered in 2026 dollars |
Breakdown of the model
- Pension version: the gross pension is taxable income and reduces the portfolio cash needed for spending. Because Kevin dies first in this example, Amy continues receiving her own full pension. The entered 50% survivor election would apply only if Amy died first.
- Rollover version: $275,000 enters Amy's Traditional IRA in 2030. It remains invested, is taxable when distributed, and is included in her future RMD calculation.
- Ownership: the rollover belongs to Amy rather than a shared account. Under the modeled sole-beneficiary assumption, any remaining IRA transfers to Kevin after her death.
- Controlled comparison: all other household, Social Security, spending, market, inflation, and tax assumptions remain unchanged.
Projected results
| Result | Monthly pension | $275,000 IRA rollover |
|---|---|---|
| Age-80 portfolio, future dollars | $1,451,796 | $1,719,403 |
| Age-80 portfolio, inflation-adjusted dollars | $954,113 | $1,129,983 |
| Total modeled taxes | $378,060 | $373,134 |
| First survivor-year income when Kevin is 91 and Amy is 89 | Amy receives $69,478 Social Security plus her $19,800 pension | Amy receives $69,478 Social Security; no pension |
| Ending portfolio, inflation-adjusted | $1,106,485 | $1,238,610 |
| Modeled depletion | None | None |
This table uses a smooth deterministic path with the Balanced allocation, Lower Long-Term Return preset derived from 20-year rolling historical periods, and 2.5% inflation. Total taxes sum annual future-dollar estimates and are not an inflation-adjusted present value. The illustrative rollover produces the larger modeled portfolio, but that does not prove it is the better election. The pension supplies dependable lifetime cash flow; the rollover result depends on market returns, investment costs, withdrawals, behavior, and longevity. The two options also may not have equal economic value.
Results across 1,000 simulated futures
Both versions use the same Simulation Seed and economic paths. Balances are inflation-adjusted. “Very Cautious” means about 90% of the simulated futures produced a result at least this high.
| Modeled risk result | Monthly pension | $275,000 IRA rollover |
|---|---|---|
| Success through age 80 | 100% | 100% |
| Success through the modeled end | 96.8% | 96.3% |
| Very Cautious age-80 balance | $411,499 | $530,965 |
| Middle age-80 balance | $961,907 | $1,130,460 |
| Very Cautious ending balance | $288,927 | $322,616 |
| Middle ending balance | $1,092,158 | $1,234,901 |
The rollover has higher modeled balances, while the pension has a slightly higher rate of covering every planned year. This is a useful tradeoff: assets available for growth and legacy can favor the rollover, while income that does not depend on selling investments can help in a small number of weak paths. A 0.5-percentage-point difference is not a precise forecast and can change with the pension quote, fees, longevity, spending, and market assumptions.
What Kevin and Amy could learn
- A larger projected balance does not automatically make the rollover safer; the pension slightly improves full-horizon spending coverage in these simulations.
- The person who dies first changes which survivor provision matters. Amy keeps her own full pension when Kevin dies first; Kevin would receive only the elected survivor percentage if Amy died first.
- The rollover creates liquidity and potential legacy value, but also transfers investment, withdrawal, fee, and longevity risk to the household.
- A fixed pension loses purchasing power during inflation unless the plan includes a COLA.
- A useful comparison requires the actual pension and lump-sum quotes for the same survivor election and commencement date.
How to recreate the study
- Load the study, which begins with Amy's monthly pension, and select the 67 / 67 · No Conversion row.
- Record the age-80 balance, taxes, ending balance, and first survivor-year income.
- Remove Amy's pension from Other Retirement Income.
- Enter $275,000 under Pre-Tax Rollovers, use 2030, select Early in Year, select Spouse as owner, and keep the survivor-transfer option enabled.
- Compare the same scenario and run Retirement Risk Analysis for both versions using the same simulated paths.
Related guides and resources
Compare your actual pension choices
Use the pension administrator's monthly benefit, survivor election, lump-sum amount, and payment date to build two consistent versions.
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