• RMD Table 2025
• Schwab RMD Calculator

Required Minimum Distributions could force you to withdraw as much as 15% of your account balance in a single year. 

They don’t start anywhere near that high, of course—they begin with much smaller percentages in your early 70s—but those withdrawal rates steadily increase as you age.

And it’s this escalating schedule that causes many retirees to worry they’ll be pushed into taking out—and possibly spending—far more than is sustainable.

Now, you and I both know that just because the IRS makes you take money out doesn’t mean you have to spend it. But RMDs can get confusing, the concerns are real, and I’ve been getting some excellent questions on this topic lately.

So today, we’re going to unpack how RMDs really work, the surprising assumptions behind the IRS tables, why they’re actually more conservative than most people realize, and how you can use them to build a dynamic withdrawal strategy in retirement. I’ll also cover proactive things you can do before age 73 to avoid giving the IRS more than its fair share.

To avoid any potential confusion, let me make this perfectly clear: Required Minimum Distributions cannot cause you to over-withdraw in retirement. They might cause you to overpay the IRS if you don’t do any proactive tax planning earlier in retirement, but they aren’t going to force you to outlive your money. Again, just because the IRS forces you to take out some money out of your pre-tax retirement accounts doesn’t mean that you have to go and spend it all.  

In fact, for many of our clients, we simply transfer some or all of their RMD each year to a plain vanilla brokerage account where it gets reinvested right back into their target asset allocation that’s aligned with their long-term plan.

And really quick, just to be sure we’re all on the same page here before we dive deeper, required minimum distributions or RMDs now begin at either age 73 or 75, depending on your date of birth. Prior to 2020, you might recall the RMD age was 70 ½, then the Secure ACT raised the starting age to 72, and finally the Secure ACT 2.0 raised it again to age 73 in 2022 and scheduled a future increase to age 75 starting in 2033. 

To keep things simple today, I’ll be using age 73 as the RMD age. So, at age 73, the IRS comes knocking on your door and says, hey, all of this money you’ve saved in your traditional IRA or traditional 401k, this money has never been taxed before, and now it’s time for you to pay your fair share. 

So each year, starting at age 73, the IRS forces you to take out a percentage of your pre-tax retirement account balance. The percentage starts at a very reasonable 3.8%, but jumps to about 5% at age 80, 6.5% at age 85, 11% at age 95, and over 15% at age 100. This withdrawal percentage is determined by your life expectancy, and more specifically, the IRS uniform lifetime tax table which I’ll link to in today’s show notes. 

If you dig into the numbers a little bit, one interesting thing you’ll notice about the Uniform Life Table, is that at age 73, it states that your distribution period (aka your life expectancy)… it states that your distribution period is 26.5 years, or until you are 98 years old. But at age 83, it says your distribution period ends at age 100, and then at age 100, it says that your distribution period ends at 106. The reason for this, as you might have figured out, is that study after study has concluded that the longer you live, the longer you are expected to live. 

And speaking of how long you’re expected to live, if you look closely, you’ll notice that the IRS Uniform Lifetime Table for RMDs stretches distributions over much longer periods than the Social Security life tables. In other words, the IRS appears to expect that you’ll live much longer than the Social Security Administation. 

For example, at age 73, the IRS requires distributions based on a 26.5-year period. On the other hand, the Social Security Administration estimates that a 73-year-old male has about 12 years left and a 73-year-old female has about 14 years. At age 80, the IRS figure is roughly 20 years, compared to only about 8 years according to social security..

Why the gap? Well, the social security tables show the average remaining life expectancy for an individual. The IRS, on the other hand, designed its Uniform Lifetime Table to approximate the joint life expectancy of the account owner and a spouse who is no more than 10 years younger. That means the withdrawals are intentionally smaller and more gradual than they would be using a single-life expectancy.

And here’s the key: this rule applies to everyone—married, single, widowed, or divorced. Even if you don’t have a younger spouse, you’re still required to use the Uniform Lifetime Table unless your spouse is your sole beneficiary and more than 10 years younger. That’s why RMD withdrawal rates are conservative by design—they’re meant to help ensure you don’t outlive your savings, even if you live longer than average or your situation changes.

Given this conservative design, some retirement researchers—like David Blanchett—argue that using RMDs as the basis for creating a long-term retirement paycheck can actually be an efficient strategy. And that’s because the RMD formula automatically adjusts your annual withdrawals based on two critical factors: your remaining life expectancy and the performance of your investments.

In other words, RMDs naturally create a dynamic withdrawal strategy—one where your annual paycheck rises or falls depending on both your age and your year-end account balance. And if you’ve listened to this show before, you know I’m a strong advocate for dynamic approaches, because they’re designed to flex and adjust with real-world conditions instead of sticking to a rigid rule like the 4% rule.

That said, the drawback with an RMD-based withdrawal strategy is income volatility. Your paycheck will change every single year—sometimes quite dramatically—because both your life expectancy and your portfolio balance reset annually. In contrast, the well-researched “guardrails” withdrawal strategy we implement for clients at my firm allows for more stability. With guardrails, adjustments usually only happen every three to five years, and when they do, the change is capped at 10% in either direction.

To make this even more concrete, and just to be sure everyone is up to speed, here’s how Required Minimum Distributions are actually calculated. Each year, you take your pre-tax retirement account balance from December 31st of the prior year and divide it by the distribution period listed in the IRS Uniform Lifetime Table. Again, I’ll include a link to that table in today’s show notes which you can find by going to youstaywealthy.com/250.

So, for example, imagine you’re 75 years old here in 2025 with a nice clean $1 million pre-tax retirement account balance as of 12/31/2024. Looking up age 75 on the table, you’ll find that your distribution period at age 75 is 24.6. You would then divide $1 million by 24.6, and determine that your required distribution this year would be just shy of $41,000. 

This simple formula makes it easy to see why an RMD-based withdrawal strategy creates a significantly different “paycheck” every single year. Your account balance changes annually based on your withdrawals and investment performance, and the IRS distribution period (i.e., the divisor) shrinks as you age. For retirees who thrive on stability, these shifting withdrawal amounts can feel jarring—especially for those on a strict budget or managing a more modest portfolio.

There’s one more wrinkle to keep in mind here if you’re considering an RMD-based withdrawal strategy or simply want to be smart with your retirement planning: and that is large age gaps between spouses.

As mentioned a few minutes ago, the IRS Uniform Lifetime Table for RMDS that we’ve been discussing assumes that you have a spouse (even if you don’t) and it assumes that your spouse is no more than 10 years younger than you. But if your spouse is, in fact, your sole account beneficiary and they are actually more than 10 years younger than you, the IRS requires you to use a different table known as the Joint Life Expectancy Table, which accounts for both of your actual life expectancies.

Now, here’s where planning ahead matters. If both of you expect to live longer than average—and let’s be honest, if you’re listening to this podcast right now, you probably fall into that camp—if both of you expect to live longer than average, then spending your entire RMD every year could leave you exposed to longevity risk. In that case, setting aside and reinvesting a portion of each year’s RMD can act as a safety net, ensuring your income lasts even if you live well beyond the averages.

All this talk about RMDs wouldn’t be complete without a reminder: the best time to take control of required distributions is well before age 73—before the IRS shows up at your door and forces taxable withdrawals. Because, once RMDs begin, your flexibility shrinks dramatically. 

One way to get ahead is by implementing thoughtful, systematic Roth conversions, ideally during your “gap years”—that window between your retirement date and your early 70s, before Social Security and RMDs kick in.

At my firm, we’ve built a process called the Total Retirement System. It’s a four-step framework for helping clients navigate retirement, and it very intentionally begins with a long-term tax analysis—not investments or income planning like many assume. We intentionally start the process here because taxes touch nearly every financial decision you’ll make in retirement. Part of that detailed tax analysis includes projecting your future RMDs, and those projections can be eye-opening. For example, for married couples who have been diligently saving into pre-tax retirement accounts, it’s not unusual to project healthy six-figure RMDs that push them into higher tax brackets in their 70s than they ever faced while working. 

And even if retirement account balances are more modest, the math still matters. Say you have $1 million in an IRA, you’re in the 22% bracket today, and projections show that by the time you’re 73, RMDs combined with Social Security and a pension could bump you into the 32% bracket. The question becomes, would you rather convert and start paying 22% on those dollars today, or wait, do nothing, and pay 32% later—possibly on an even larger balance if your $1 million grows to say, $2 million?

This is what we call a “growing tax liability.” And it’s why Roth conversions can make sense even if you expect your tax bracket to stay the same from your gap years through your 70s and until end of life. Because you could potentially choose to pay 22% on some or all of your pre-tax dollars $1 million today, or do nothing, watch the account balance grow, and then pay the same 22% on a larger balance in the future.

At the end of the day, smart tax planning isn’t about gaming the system or dodging the IRS. It’s about paying taxes on your terms—when the rates and timing work in your favor—instead of letting the IRS dictate when and how much. That’s why RMDs matter so much. Understanding how they work, how they’re calculated, and what you can do between now and your early 70s to reduce them can potentially make a sizeable dent in your lifetime tax bill and significantly improve the success of your retirement plan.

If today’s episode left you wondering how RMDs, taxes, or income planning fit into your own retirement, that’s exactly what we designed the Total Retirement System™ to solve.

It’s our four-step process that starts with long-term tax planning and ties together every other piece of your financial life—income, investments, and legacy—so you can retire with clarity and confidence.

If you’d like to see how it works in your situation, you can learn more about us and schedule a free consultation by following the link in the episode description or by visiting www.freeretirementassessment.com.  

Our team will answer your biggest questions, walk you through our process, and help you decide if we’re the right fit.

Because at the end of the day, you don’t just need a retirement plan—you need a coordinated system that works together to support the life you want to live.

Disclaimer

This podcast is for informational and entertainment purposes only, and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.