Understanding RMDs: What Every Retiree Needs to Know Before Age 73

Hi humans — Tootsie here, your loyal, biscuit-motivated Chief Retirement Sniffer-Outer, reporting for duty. 🐶 Today we’re digging into something important that sneaks up on retirees faster than the mailman: Required Minimum Distributions, better known as RMDs.

If you have Traditional IRAs, 401(k)s, 403(b)s, SEP IRAs, SIMPLE IRAs, or other tax-deferred retirement accounts, the IRS eventually requires you to start withdrawing money. Even if you’d prefer to let it grow untouched, the government has a timeline — and they stick to it more strictly than my snack schedule. Under today’s rules (thanks to the SECURE Act 2.0), those withdrawals must begin at age 73.

And trust me… missing that deadline causes more chaos than a squirrel sprinting across the yard.

What Exactly Are RMDs?

RMDs are mandatory, taxable withdrawals the IRS requires you to take from certain retirement accounts every year once you reach the official starting age. These withdrawals ensure the government eventually collects taxes on money that’s been growing tax-deferred for decades.

Your RMD amount is based on two things:

• Your account balance (as of December 31 of the previous year)
• Your life expectancy factor, taken from IRS tables

Each year, the calculation changes as your age — and potentially your account balance — changes. And yes, the IRS checks. Closely.

Think of it like when my mom opens the treat jar and says, “Tootsie, you HAVE to eat one.” I might want to save my biscuit for later, but the rule is the rule. With RMDs, it’s the same: whether or not you need the income, the withdrawal must happen.

Why Planning Your RMDs Matters

This is where it gets important for retirement income planning — because RMDs affect far more than just one annual withdrawal.

📌 1. Tax Impact

Your RMD counts as ordinary income, which can increase your tax bill. Without proper planning, retirees may unintentionally move into a higher tax bracket.

📌 2. Social Security Taxation

RMDs can increase your combined income, leading to more of your Social Security benefits becoming taxable.

📌 3. Medicare Premiums (IRMAA)

Large RMDs may trigger higher Medicare Part B and Part D premiums — something many retirees don’t see coming.

📌 4. Cash Flow Stability

Because RMDs are required even during market downturns, retirees without a plan may be forced to withdraw at the worst possible time.

📌 5. Long-Term Legacy Planning

Coordinating RMDs with your beneficiaries and estate strategy can help preserve more for heirs.

RMDs are much more than just a once-a-year box to check. They are a crucial piece of your retirement income, tax strategy, estate plan, and long-term financial stability.

What Happens If You Skip or Miss Your RMD?

Here’s where the fur really flies: missing an RMD can result in a penalty of up to 25% of the amount you should have withdrawn. That’s like losing a quarter of your entire treat stash because you forgot to show up in the kitchen on time. Painful.

The IRS may reduce the penalty under certain circumstances, but relying on that forgiveness is risky. The better approach is having a clear, organized RMD strategy long before age 73 rolls around.

Smart Ways to Manage RMDs

A licensed retirement income professional can help you navigate options such as:

✔️ Consolidating Accounts

Fewer accounts mean fewer RMD calculations and deadlines to juggle.

✔️ Using Qualified Longevity Annuity Contracts (QLACs)

These allow you to defer RMDs on a portion of IRA funds until age 85.

✔️ Coordinating RMDs With Annuities or Income Riders

Annuities can create predictable income streams that help support RMD withdrawals.

✔️ Planning Charitable Giving With QCDs

If you’re charitably inclined, Qualified Charitable Distributions can satisfy RMDs while reducing taxable income.

✔️ Multi-Year Tax Planning

Strategically shifting withdrawals or Roth conversions before age 73 can minimize future RMD burdens.

Smart planning can turn RMDs from something stressful into just another part of your dependable, predictable retirement income plan.

🐾 Tootsie’s Takeaway

RMDs don’t have to be ruff.
With clear planning, yearly reviews, and guidance from a licensed retirement income professional, you can avoid penalties, reduce taxes, and keep your retirement income as steady as my afternoon nap schedule. 🐾

Want to Know More?

If you’re approaching age 73 — or just want to get ahead of the curve — connect with a vetted retirement income professional at SafeMoney.com. Getting the right guidance now can make your RMDs smooth, predictable, and stress-free.

Disclaimer: This content is for informational and educational purposes only and is not intended to provide specific insurance, tax, or investment advice. Financial strategies, income tools, and product features may vary by provider. Readers should consult with a licensed financial professional before making any decisions regarding their retirement planning.