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Retiree With $48,000 Military Pension and $1.3 Million Slammed By Three Layers of Tax
Key takeaways
- Retiring at 65 drops household income by $165,000 overnight, which opens an 8-year window to convert TSP funds at a 12% to 22% rate rather than the current 24%.
- Pulling TSP funds while the W-2 is still active stacks income at the highest bracket, so ages 65 through 72 represent the cheapest window for Roth conversions.
- Many financial professionals are salespeople paid on what they push, not whether you end up wealthier.
Retiree With $48,000 Military Pension and $1.3 Million Slammed By Three Layers of Tax Carl Sullivan Thu, June 11, 2026 at 7:06 PM GMT+7 5 min read Quick Read A military pension plus a civilian W-2 triggers three separate tax layers: federal income tax, state income tax, and FICA on the $165,000 salary.
Retiring at 65 drops household income by $165,000 overnight, which opens an 8-year window to convert TSP funds at a 12% to 22% rate rather than the current 24%.
Pulling TSP funds while the W-2 is still active stacks income at the highest bracket, so ages 65 through 72 represent the cheapest window for Roth conversions.
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