What to do with RMD?
Hello Terry
First, thank you so much for being so available to all of us who follow you, listen to you (WGN) and see you (WGN). I appreciate you, your time and your expertise.
My question is: do have suggestions on what to do with the RMD I am taking for the first time this year? I am kind of ticked off that I have to start taking this money in the first place (I know, it’s government mandated) and in the second place I don’t really know what to do with it?
Is a Roth IRA wise? Is dividing it between short term and long(er) term CDs wise? I would prefer not to have easy access to all of it but easy(er) access to some of it (perhaps $500-$1,000) might be a good idea. I am assuming taxes would have to paid (again) on any interest generated from the re-investment of the RMD funds?
My husband and I are (and always have been) no greater than middle class. We do not have a ton of investments or wealth. We are modestly comfortable in retirement and are able to maintain a modest life style on our current income (combination of soc security and very modest income from part time jobs we work for fun and interaction and activity more than the income).
My initial question may be too much to ask given that you are not able to know our entire financial picture. However, if you can, perhaps, make a few suggestions for us to consider, I would be most grateful.
Again, thank you for your time and knowledge and expertise.
Warm regards
Terry Says
Thanks for your kind columns. And welcome to a pretty exclusive club: people who must take RMDs but have no urgent need for the money!
RMDs were created so the government can get its tax dollars! Once you have paid the taxes, you can spend, save, or invest the remainder. And yes ant earnings on that saved money will be taxed!
You cannot open another IRA unless you have “earned income” from work.
This is the perfect time to evaluate your retirement lifestyle needs — everything from enjoying that money you worked to save (perhaps a vacation) to being charitable for a cause you believe in.
A fiduciary (trusted) financial advisor who is not trying to sell you anything could help toy through this process.
Read this: https://www.terrysavage.com/pam-krueger-wealthramp/
