Retirees sticking to minimum withdrawals risk running out of funds, financial experts recommend flexible strategy.

From Yahoo Finance: 2025-03-25 08:30:00

A study from JPMorgan Chase reveals that retirees who only withdraw the minimum required distributions may not meet their income needs or maximize their savings. Many retirees are preserving capital, but this caution could be misguided, according to financial experts at JPMorgan Chase.

RMDs are minimum withdrawals required from tax-advantaged retirement accounts at a certain age. While most retirement plans and IRAs are subject to RMDs, Roth IRAs are exempt. The amount is calculated based on the account balance and life expectancy factor set by the IRS.

A flexible withdrawal strategy that aligns with retirees’ spending behaviors is more effective than sticking to RMDs. By reflecting actual spending, retirees can support higher spending early in retirement and make better use of their savings.

Comparing the RMD approach to a declining consumption strategy, the study found that the latter can support more spending until later in life, reducing the risk of outliving savings. A financial advisor can help optimize an RMD strategy based on individual needs and goals.

84% of retirees are limiting their withdrawals to RMDs, potentially leading to insufficient income in retirement. A withdrawal strategy tailored to spending needs can provide more income and reduce the risk of running out of funds. Planning for retirement with a financial advisor can help optimize savings and income strategies.

Read more: Are You One of the 84% of Retirees Making This RMD Mistake?