Are You Making This RMD Mistake?

Most retirees are—and it can quietly shrink the lifestyle you spent decades saving for.

A recent J.P. Morgan study found that 84 percent of people who’ve reached required-minimum-distribution (RMD) age withdraw only the mandated amount from their traditional IRAs and 401(k)s. Another 80 percent of pre-RMD retirees avoid their accounts altogether. It feels prudent—why pay extra tax today?—but letting the IRS’s minimum become your de-facto spending plan can backfire in three big ways.

1. RMDs are a tax rule, not a retirement-income strategy

The withdrawal factor the IRS assigns you (account balance ÷ life-expectancy divisor) was never meant to dictate how you live. If you simply accept that number, you may:

• Under-spend in your active, “go-go” years when travel, hobbies and family time are most meaningful.

• Leave an oversize balance that pushes future RMDs (and therefore future tax bills) even higher.

• Trap yourself in a pattern that ignores inflation, healthcare shocks and market opportunities.

2. “Minimum only” can cost you opportunities

Withdrawing more than the minimum—strategically—can:

• Fill up lower tax brackets now. Systematic Roth conversions or additional distributions during years of modest income can save you (and your heirs) substantial tax later.

• Let you rebalance intelligently. Selling appreciated positions when valuations are high and redeploying proceeds outside the IRA can diversify risk.

• Fund meaningful goals. Whether it’s grandkids’ 529 plans, bucket-list travel or charitable gifts via qualified charitable distributions (QCDs), spending deliberately is better than spending by default.

3. The distribution pattern rarely matches real-world spending

Retirees generally spend the most in their 60s and early 70s (the “go-go” phase), taper in their 80s (“slow-go”) and spend primarily on healthcare in their 90s (“no-go”). RMD percentages move in the opposite direction—tiny at 73, escalating every year thereafter. Align withdrawals with how life really unfolds, not with how a table escalates.

When taking only the RMD does make sense

• Your Social Security, pension or rental income already cover day-to-day needs and you genuinely wish to preserve the IRA for heirs in lower tax brackets.

• Extra withdrawals would push you into a harsh Medicare-IRMAA surcharge or a materially higher marginal bracket.

• You’ve already filled tax-efficient buckets (taxable brokerage, Roth, HSA) and prefer the forced-savings discipline RMD minimums give you.

Even then, revisit the decision annually—tax laws, market levels and personal goals shift.

Four ways to turn RMDs into an advantage

1. Draft a multi-account withdrawal sequence
   Blend traditional, Roth and brokerage assets so cash flow stays steady while taxes stay controlled.

2. Chip away with Roth conversions before 73
   Moving dollars in low-tax years can shrink future RMDs and create a tax-free bucket for late-life healthcare or surviving spouses.

3. Reinvest what you don’t spend
   If you don’t need the distribution, funnel it into a diversified taxable portfolio—or use QCDs (up to $100,000 per year, starting at age 70½) to satisfy your RMD and satisfy your charitable heart.

4. Stress-test the plan
   Model bear markets, higher inflation and longevity to see whether “minimum only” leaves you short—or leaves Uncle Sam more than necessary.

Your next step

Ask yourself:

• Am I using RMDs because they’re convenient—or because they’re optimal?

• Do I know my marginal tax bracket five, ten, twenty years down the road?

• Have I mapped spending desires against expected health and energy, not just against an IRS table?

If the answers feel fuzzy, run the numbers or partner with a planner who can. A thoughtful distribution strategy can mean more memories made today, lower taxes tomorrow and a smoother legacy later.

Retirement is too short—and too long—to let the IRS write your spending plan. Make the rules work for you, not the other way around.

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