Could Required Minimum Distributions Cause You to Overspend?

Plus: 5 must-knows about RMDs as 2024 winds down. [Morningstar](?utm_source=eloqua&utm_medium=email&utm_campaign=improvingfinances&utm_content=none_59771&utm_id=30729&elqTrackId=076b02ce37184785a1d6545e714447c2&elq=d2179e6057064874a1fbeeefe5ef8017&elqaid=59771&elqat=1&elqCampaignId=30729&elqak=8AF5D8BE92C2A70C0779C52B32771FB7C6D8399CCFEB9A2653369C70502A61BE1626) [Improving Your Finances] Improving Your Finances with [Christine Benz]( [Christine Benz] When I’m out and about talking about retirement planning and [our team’s now-annual research on safe withdrawal rates]( (the 2024 version is coming soon!), one question pops up a lot: Don’t required minimum distributions cause you to spend at higher levels than you’re discussing here? The glib answer is that it’s a required minimum distribution; it’s not required minimum spending. The IRS needs to get its cut of your tax-deferred accounts once you hit age 73, but there’s nothing stopping you from reinvesting the funds somewhere else. A taxable account is the most likely choice for people who are of RMD age, but if you or your spouse has earned income, you can even put the funds back into a Roth. But I also think that retirees might not realize that the [RMD calculations are pretty conservative](. Not only were the life expectancies in the RMD tables updated in 2022 to reflect new data, but they also give you a healthy cushion beyond your own life expectancy. Elsewhere on the RMD beat, [I recently sat down with Susan Dziubinski]( to discuss why many retirees will find their RMDs on the large side this year and what to do [if your RMD amount is over your planned portfolio withdrawal amount](. In the realm of tax policy, I appreciated [Aron Szapiro’s exploration of “Rothification”]( possibility that Congress could take action to require new retirement plan contributions to go into Roth accounts. While any such legislation would need to get through Congress, Aron points out that Roth contributions aren’t always best, in no small part because many people will be in a lower tax bracket when they’re retired versus when they were working. Finally, tax-loss selling isn’t out of the question as 2024 winds down, even though it has been a bang-up year for investors. [Amy Arnott made the case for why it’s not too late to hunt around for tax-loss sale candidates]( and [I chatted with Margaret Giles about some of the best places to look for tax-loss opportunities today]( . With warm regards, Christine Benz [Could Required Minimum Distributions Cause You to Overspend?]( The calculations for RMDs are more conservative than many people realize. [Read More]( Share: [facebook]( [twitter]( [linkedin]( ADVERTISEMENT [media]( [media] [5 Must-Knows About RMDs as 2024 Winds Down]( Here’s how to avoid costly mistakes with your required minimum distributions. [Watch Now]( [Benz: What to Do With Unneeded RMDs]( Morningstar is an investment research company offering mutual fund, ETF, and stock analysis, ratings, and data, and portfolio tools. Discover actionable insights today. [Read More]( [Is ‘Rothification’ Coming for Your Retirement Account?]( How a change in tax policy for IRAs and 401(k)s could help or hurt investors. [Find Out More]( [Yes, You Can Still Find Tax-Loss Harvesting Opportunities in 2024]( Tax-loss selling is easiest in bear markets but don’t rule it out this year. [Watch Now]( [It’s Not Too Late for Tax-Loss Harvesting]( Despite a generally bullish market in 2023 and 2024, investors can still find stocks and funds with unrealized losses. [Read More]( What's the secret to a healthy, happy, and wealthy retirement? To find out, Christine Benz asked 20 retirement experts to each share one key lesson they believe leads to success. The result is her new book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement. Her latest work is designed to give you the tools and insights you need—whether you're nearing retirement or already retired—to approach it with confidence, wisdom, and a specific plan to maximize both your financial and personal resources. [Order Christine's New Book, How to Retire, Today!](zg_bs_g_2731_d_sccl_1/143-2932733-6203903?utm_source=eloqua&utm_medium=email&utm_campaign=improvingfinances&utm_content=none_59771&utm_id=30729&psc=1&elqTrackId=a68ce115c5eb4e348a4b4a7025738670&elq=d2179e6057064874a1fbeeefe5ef8017&elqaid=59771&elqat=1&elqCampaignId=30729&elqcst=272&elqcsid=4241&elqak=8AF5942E4FE13814F72667252EC64A240AC9399CCFEB9A2653369C70502A61BE1626) Stay connected: [twitter]( [facebook]( [linkedin]( [instagram]( [YouTube]( [Apple News]( [View online]( | [See all newsletters]( | [Share your feedback]( [Unsubscribe]( from this newsletter. Or update your [email preferences](. © 2024 Morningstar, Inc. All Rights Reserved. 22 W. Washington St. Chicago, IL 60602