Welcome to the Stay Walthy podcast. I'm your host, Taylor Schulte, and today I'm talking about

required minimum distributions, also referred to as RMDs. And as you might know, R&D withdrawal rates

can get as high as 12% of your account balance, which is quite a bit higher than even the most aggressive safe

withdrawal rates that we discussed last month during the retirement income series. And these

aggressive RMD withdrawal rates cause some people to worry that these forced required distributions

could cause them to over-withdraw and outlive their money.

Now, I know this audience is smart enough to know that just because the IRS forces you to take out money and pay some taxes doesn't mean that you have to go and spend all of that

money.

However, Christine Benz over at Morningstar, she wrote a great article on this topic recently, and I thought

it would be a good launching pad into talking more about RMDs, how they're calculated, and how you

can actually use RMDs to create a withdrawal strategy similar to something like Guyton's guardrails

or the 4% rule. Let's dive in, but first, if you want to grab the links and

resources from today's episode, just head over to you staywealthy.com forward slash 125. So in short,

no, RMDs cannot cause you to over withdraw. They might cause you to overpay the IRS if you don't

do any proactive tax planning during your gap years, but they aren't going to force you to overpay the IRS if you don't do any proactive tax planning during your gap years,

but they aren't going to force you to outlive your money.

Again, just because you're forced to take out some money out of your traditional IRA or traditional 401k

and pay some taxes on that withdrawal doesn't mean that you have to go and spend all of that money.

In fact,

many of our clients simply have us transfer all or some of their RMD each year to a plain vanilla brokerage account where it gets reinvested right back into their asset allocation and

back into the markets. And really quick, just to be sure we're all on the same page here today, required minimum

distributions or RMDs begin at age 72. At age 72, the IRS comes knocking on your door and says,

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