Most Retirees May Be Waiting Too Long to Spend Their Savings

September 8, 2021

Most retirees are holding off on tapping their nest eggs until they are required by law to do so, according to new research from J.P. Morgan and the Employee Benefit Research Institute.

The research found that roughly 80% of retirees do not make any withdrawals from their retirement accounts until required minimum distributions (RMDs) kick in. Retirees with smaller account balances were more likely to avoid making withdrawals prior to reaching RMD age.

Furthermore, once retirees reach the age when RMDs begin, 84% withdraw only the minimum required amount every year.

In 2019, the Secure Act raised the RMD age from 70½ to 72, and a pair of bills currently in the House and Senate are pushing to raise the age to 75 by 2032.

Researchers noted that without a clear spending strategy, many retirees appear to be relying on RMDs as guidance for how they ought to distribute their wealth, something that these guidelines are not intended to do.

While concerns about longevity and unexpected medical costs are valid, the research found that retirees may be sacrificing their lifestyles and diminishing their quality of life needlessly during retirement. Following RMDs alone may leave retirees with a sizable balance even at age 100, according to the research.


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