Episode #22: Strategizing RMDs


The Principle:

It’s that time of year when folks of a certain age take their required minimum distributions. Brian explains RMDs and why you need a strategy for them.

(Click the featured times below to jump forward in the episode)

Honest Takes:

[1:04] – Do You Have A Strategy? 

  • Once you reach the age of 70 1/2, the government is going to require you to withdraw from your retirement accounts and pay taxes on your withdrawals if they’re coming from tax-deferred accounts. These withdrawals are called required minimum distributions or RMDs. You need to have a strategy for your RMDs. Otherwise, your advisor could haphazardly withdraw from your retirement accounts. In this scenario, especially if you’re withdrawing from stocks that have performed poorly, you could be losing money. Therefore, you really need a plan for your RMDs.

[1:55] – Consider Volatility.  

  • Consider the volatility in your portfolio and factor that into your RMD decision-making process. Even if your assets are producing a seven, eight, or nine percent return, you could be losing money if your assets are more volatile. The amount of volatility in your portfolio is more important than even your rate of return.

[4:45] – Consider The Tax Implications Of Your RMDs.  

  • Consider the tax burden your RMDs will bring. If you’re invested in tax-deferred accounts, you could face a sizable tax bill in retirement. Some folks will go as far as to use charitable donations to satisfy the requirements for their RMDs. No matter your strategy, just make sure you have one. How you withdraw your RMDs will greatly impact your overall retirement plan.

Today’s Truth:

Other Virtues:

The host: Brian Bowen – Contact

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