Factor In Your Required Minimum Distributions
Speaking of your retirement income, it’s time to talk about RDMs, required minimum distributions. These kick in six months after you turn 70, meaning you’ll be ‘forced’ to withdraw money from your retirement plans with the exception of your Roth IRA.
That’s because the money you put into those accounts was not taxed when you made contributions. Uncle Sam still needs his taxes, though, which is why you’ll have to start making withdrawals. If you don’t do so, you’ll have to face stiff penalties, sometimes as high as 50% of the amount you were supposed to take out of that account.
When you start taking these distributions, it’s likely you’ll shift to a higher tax bracket too. So, as we said earlier, coming up with a clever financial plan that encompasses the taxes you’ll have to pay is the best way to ensure your retirement money won’t take any unnecessary hits.
