Retirement Planning Guide
Living in retirement
The right strategies can help your money last through retirement. We’ll help you understand your choices, so your hard-earned funds go the distance—and you can focus on what matters most.
Managing your retirement income
Retirement isn’t just a lifestyle change—it can also mean big shifts in how you manage your money, including implementing a long-term drawdown strategy. Be prepared with a plan.
Ensure your money will last through retirement
Review your income plan and make any updates you might need to stay on track. For your retirement accounts, consider withdrawal strategies that maximize tax savings and income.
Decide when to withdraw from your accounts
In most cases, you can start making penalty-free withdrawals from your retirement accounts at age 59½. In order to avoid penalties, certain retirement accounts require mandatory withdrawals (i.e., required minimum distributions) when the account owner turns 73.
Navigating Required Minimum Distributions (RMDs)
Generally, once you turn 73, you’ll need to take required minimum distributions (RMDs) from most retirement accounts, whether you need the money or not.
Here are some important things to know about required minimum distributions, also known as RMDs.
One, you are required to withdraw an RMD annually beginning the year you turn 73.
Two, accounts that require RMDs include traditional IRAs, 401(k)s and 403(b)s. Roth accounts have no RMD for the original owner.
Three, RMD amounts are based on your age and your account balance at the end of the prior year.
Four, you can choose to take your distribution as a lump sum or in installments throughout the year.
Five, how you use your RMD is up to you. You can spend it, reinvest it in a taxable account, make a qualified charitable distribution or fund a grandchild's education.
Start planning for your RMD before you turn 73.
Contact a T. Rowe Price financial consultant to talk it over today.
What is an RMD?
An RMD is the minimum amount of money the IRS requires you to withdraw from most types of tax-deferred retirement accounts, including 401(k)s and Traditional IRAs, once you reach a certain age.
When do I have to start taking RMDs?
The age to start taking RMDs is 73, although you have until April 1 of the following year to withdraw your first RMD. Failure to do so can result in an IRS penalty tax.
What if I don’t need my RMD for living expenses?
If you don’t need to put your RMD toward living expenses, you’re free to reinvest the money in a taxable account. You could also choose to contribute to a loved one’s education fund or make a charitable donation.
A solid plan can help your income go further
From RMDs to Social Security and beyond, how you take money out of your accounts can have a real impact on your retirement income, especially when it comes to taxes. When it's time to take your RMDs, consider how they’ll fit with your other income sources, ongoing expenses, and financial strategies.
How to make your retirement account withdrawals work best for you
These approaches can extend the life of a portfolio and preserve assets for heirs.
Need help getting the most out of your retirement income?
With our Retirement Advisory ServiceTM, you can partner with one of our advisors to help you manage your retirement income. Together, we’ll create an actionable plan based on the retirement you’ve envisioned.
Not sure about next steps? Schedule a free consultation to find out if a 1:1 relationship with one of our advisors is right for you.
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