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IRA RMDs — what to do with them

By Terry Savage on November 11, 2019 | Wild Card

Reading your article on personal finance, I notice that you make a statement (as do others at times) that can be ambiguous and misinterpreted.
Your statement: “Yes, there are required minimum withdrawals from your tax sheltered accounts. But what if you live longer. You’ll need to understand how to provide for longevity beyond the averages.” The statement can be misinterpreted by someone not financially astute that the money taken in a RMD is either lost or must be spent. And of course neither is true. Except for the taxes, you have the same amount of money the day after the RMD as you did the day before.

Terry Says

You’re absolutely correct. But the vast majority of my readers think of the RMD as their “living money” for that year. I think relatively few people have the self-discipline to save some of that money OUTSIDE their IRA, or have the additional retirement income that allows them to do so. So, I’m truly worried that those who live longer than the RMD period which is designed to “empty” their IRA will run out of money and live longer.

In fact, the government is also worried! You’ll see that the SEC just proposed new tables for RMD withdrawals to try to deal with this issue. Here’s a link to a WSJ article from November 7th discussing this very issue!

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