The RMD Mistake 85% Retirees Keep Making Without Knowing It

You finally reach retirement with a healthy IRA or 401(k), and then another number starts showing up every year: your required minimum distribution. Your custodian may even calculate it for you, making the process feel almost automatic.

That convenience can create a problem. Many retirees start treating the RMD as the amount they are supposed to live on, even though the IRS never designed it as a retirement spending recommendation.

The popular statistic attached to this idea also needs one correction. Research involving about 31,000 people found that 84% of retirees who had reached RMD age took only the required amount, rather than 85%.

The Real RMD Mistake Is Treating the Minimum Like a Spending Rule

An RMD is a tax rule. It tells you the minimum amount that generally must leave certain retirement accounts each year once the rules apply to you.

It does not tell you how much retirement income you need. It also does not know whether you want to travel, replace your roof, help your grandchildren, donate to charity, or preserve a large estate.

That distinction is where the famous 84% finding becomes interesting. JPMorgan related research found that a large majority of retirees reaching RMD age were withdrawing only what the rules forced them to take.

There are good reasons for doing that. You may already have enough income from Social Security, a pension, cash savings, and a taxable brokerage account.

But there is another possibility. You may have spent 40 years training yourself to save and now feel uncomfortable spending the money.

If that is happening, the RMD can quietly become a psychological spending ceiling.

That is the part worth questioning. The required minimum is a floor, not a retirement income target.

What the 2026 RMD Rules Actually Require

Current RMD rules depend partly on your birth year. Under SECURE 2.0, the applicable RMD age is 73 for many current retirees, while the starting age rises to 75 for younger groups covered by the later rule.

People born in 1960 or later generally fall under the age 75 rule. That gives younger retirees more years before mandatory withdrawals begin.

Traditional IRAs are generally subject to RMDs. The rules also apply to accounts such as SEP IRAs, SIMPLE IRAs, and many employer retirement plans.

Roth accounts received an important change. Roth IRAs have no lifetime RMD requirement for the original owner, and SECURE 2.0 also eliminated lifetime RMDs for designated Roth accounts inside employer plans.

Your first RMD also creates a timing decision. The IRS generally allows the first distribution to be delayed until April 1 of the following year.

But delaying it can mean taking two taxable RMDs in one calendar year because the next year’s distribution is still generally due by December 31. The IRS itself notes that taking the first withdrawal during the year you reach the applicable age can keep the two distributions in separate tax years.

That timing can matter if two distributions push your income into a less favorable position.

How Your Required Minimum Distribution Is Calculated

For most IRA owners, the basic RMD formula is simple. Start with the account value on December 31 of the previous year, then divide that balance by the applicable IRS life expectancy factor.

For example, the IRS Uniform Lifetime Table gives a factor of 24.6 at age 75. At age 85, the factor has fallen to 16.0.

Suppose you are 75 and had $500,000 in your traditional IRA on December 31.

The calculation would be:

$500,000 ÷ 24.6 = about $20,325

That works out to a withdrawal of roughly 4.07% of the starting balance.

Here is how the percentage rises as the divisor gets smaller.

These examples assume the account balance stayed at $500,000. Real balances move with withdrawals, investment returns, fees, and market changes.

The important point is that the required percentage generally rises as you age.

That can become significant if your portfolio continues growing while you repeatedly take only the minimum.

Why Taking Only the RMD Can Create a Bigger Tax Problem Later

Consider someone who starts with a large traditional IRA and needs little of it because Social Security and a pension already cover most expenses.

The retiree takes only the required amount each year. Meanwhile, investment growth keeps much of the account intact.

Now suppose that person eventually reaches age 85 with an $800,000 traditional IRA.

The IRS divisor at age 85 is 16.0. An $800,000 balance would therefore create an RMD of:

$800,000 ÷ 16 = $50,000

That $50,000 is before adding Social Security, pension income, interest, dividends, or other taxable income.

Traditional retirement distributions are generally taxed as ordinary income to the extent the account consists of untaxed contributions and earnings. That means growing RMDs can gradually consume more of your available tax bracket.

Federal tax brackets are progressive. Moving into a higher bracket does not mean every dollar of your income suddenly receives the higher rate, but the additional dollars can face a higher marginal tax rate. The IRS shows seven federal rates for 2026, from 10% through 37%.

There is another number retirees often overlook: Medicare income related premiums.

For 2026, the standard Medicare Part B premium is $202.90 per month. Higher income beneficiaries can pay substantially more through the income related monthly adjustment amount, known as IRMAA.

For example, CMS lists a 2026 Part B premium of $284.10 per month for an individual in the first IRMAA tier above the standard threshold. Higher tiers rise further.

This does not mean you should rush out and withdraw a huge amount today. A larger withdrawal can create exactly the tax and Medicare issues you are trying to prevent.

It means you should compare several years instead of looking at one year’s RMD in isolation.

Taking Only Your RMD Can Be Completely Reasonable

There is nothing wrong with taking the minimum when the minimum fits your actual plan.

Suppose Social Security covers your basic expenses, a pension pays for most of your housing costs, and you maintain enough cash for emergencies. You may have little reason to create additional taxable retirement income.

Taking extra money simply because you can may raise your tax bill without improving your life.

The same logic can apply if you have taxable investments available for certain expenses. Which account you spend from first depends on taxes, gains, estate goals, and the rest of your financial picture.

You may also want to preserve part of a retirement account for later years. Long term care, home assistance, major repairs, and family support can all require cash.

So the lesson is not:

Always withdraw more than your RMD.

The better rule is:

Do not automatically assume the RMD is the perfect amount.

A good decision starts with the reason behind the withdrawal, not with the IRS minimum.

The Bigger RMD Mistake May Be Spending Too Little

Some retirees worry constantly about running out of money. That concern deserves respect because retirement can last decades.

But there is another risk that gets far less attention. You can reach the later years of retirement with far more money than you expected after spending your healthiest years saying no to things you could comfortably afford.

Lifelong savers are especially vulnerable to this pattern.

Saving creates a clear reward while you are working. You watch your account balances rise, and every extra dollar feels like progress.

Retirement changes the job of the portfolio. The money now has to support your life.

That transition can feel uncomfortable. A withdrawal that was part of the plan can still feel like losing money.

Using an RMD as a spending ceiling makes that discomfort easier because the decision seems to come from the government rather than from you.

But RMD tables were created to determine minimum distributions from tax advantaged accounts. They were not created to decide whether you can afford dinner with friends, a family trip, a safer car, or a more comfortable home.

You still need reasonable reserves. You still need to plan for longevity and health costs.

At the same time, preserving the largest possible account balance is not the only measure of a successful retirement.

QCDs, Roth Conversions, and Other Ways to Think Beyond the RMD

You have more choices than simply taking the RMD and depositing it into your checking account.

One option for people who give to charity is a qualified charitable distribution, or QCD.

The IRS allows eligible IRA owners who are at least 70½ to send qualifying distributions directly from an IRA to eligible charities. A QCD can count toward all or part of your RMD.

For 2026, the annual QCD limit is $111,000 per eligible individual. The distribution must meet IRS requirements to receive QCD treatment.

That can be useful if you already planned to give money to charity because a qualifying QCD is generally excluded from taxable income.

Another strategy people discuss is converting some traditional retirement money to a Roth IRA.

A Roth conversion moves money from a pretax account into a Roth account. The converted taxable amount generally becomes income in the conversion year, so this is not a free tax trick.

The potential benefit is reducing the balance that could eventually produce required distributions.

Conversions are often considered in retirement years when taxable income is temporarily lower. But the right amount depends on tax brackets, Medicare, Social Security, state taxes, estate plans, and investment assumptions.

There is one important rule once RMDs have begun. An RMD that is due for the year must be taken and cannot simply be converted into a Roth IRA.

Planning before RMD age can therefore be especially valuable.

Missing an RMD Can Be Expensive

There is another RMD mistake that is much simpler: failing to take enough by the deadline.

The IRS says an RMD shortfall may face a 25% excise tax on the amount that should have been distributed.

The rate can fall to 10% when the shortfall is corrected within the applicable correction window and the required reporting is completed. The IRS also provides a process to request a waiver in some cases involving reasonable error and corrective action.

Suppose your RMD was $30,000 but you withdrew only $20,000.

Your shortfall would be $10,000. A 25% excise tax on that shortfall would be $2,500 if the penalty applied at the full rate.

This is why RMD administration deserves a calendar reminder even when your broader withdrawal strategy is flexible.

Also remember that different account types have different aggregation rules. IRA RMDs are generally calculated separately but eligible IRA amounts can often be combined and withdrawn from one or more IRAs, while many employer plan RMDs must be satisfied separately.

A Better Retirement Withdrawal Plan Starts Before RMD Age

The best time to think about RMDs may be several years before the first one arrives.

A retiree who stops working at 65 but does not face RMDs until 73 may have several years in which taxable income is lower than it was during full time work.

Those years can be valuable planning years.

You might choose to spend some traditional IRA money earlier. You might consider partial Roth conversions. You might use taxable assets instead.

Or you might do none of those things because your current strategy already works well.

The point is to make the choice while you still have choices.

Waiting until large mandatory distributions arrive can reduce your flexibility.

A simple annual review could include these five numbers:

1. Your projected taxable income.
2. Your current traditional retirement account balance.
3. Your estimated future RMD.
4. Your Medicare income threshold.
5. The amount you actually want to spend.

Put those numbers on the same page. The relationship between them matters more than the RMD by itself.

Austin Becker

I’m Austin Becker, an advocate for living life with intention and resilience. I write for men who are actively navigating life’s major transitions, tackling the realities of reinvention and finding renewed purpose with grit and honesty. I believe that personal growth doesn’t have a deadline it’s about continuously gearing up for the chapters that matter most.
Through my work, I aim to strip away the clichés of modern manhood, offering practical, no-nonsense insights on health, mindset, and legacy for those who want to move forward with strength and clarity.