Do You Actually Have an RMD Problem? Three Retirees, Three Honest Answers

If you're anywhere close to retirement, somebody has probably tried to scare you about RMDs.

You know the pitch. Your required withdrawals are going to rocket you into a higher bracket, tax your Social Security, spike your Medicare premiums — and the only way out, conveniently, is whatever that person happens to be selling that afternoon.

Here's the honest version: some of it is true, for some people. Some retirees really do have an RMD tax problem. Some have a small one with easy fixes. And some have been talked into a problem they don't actually have.

This post is about figuring out which one is you — before you make a six-figure decision out of fear instead of math.

What an RMD Actually Is (Most of the Fear Lives in the Fog)

A required minimum distribution is money the IRS requires you to pull out of your pre-tax accounts — traditional IRAs, 401(k)s, 403(b)s — once you hit a certain age. For most people reading this, that's 73. If you were born in 1960 or later, it's 75.

The amount isn't random. It's your account balance at the end of the prior year, divided by a factor from the IRS's Uniform Lifetime Table based on your age. At 73, that factor is 26.5.

So here's what that means in real dollars for your first RMD year:

• A $1 million IRA throws off about $37,000

• $1.5 million produces about $56,000

• $2 million produces about $75,000

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That money counts as ordinary income. It can pull more of your Social Security into the taxable column — up to 85% of your Social Security benefits can be taxable depending on your combined income — and it can trigger income-related Medicare premium surcharges.

That's the machine. That's what the fear is built on.

But here's what they don't tell you at the steak dinner: whether that machine ever actually hurts you comes down to one thing — how much is sitting in those accounts when you turn 73. And that number is still in your hands.

So let me give you three retirees. Three different people, three RMD realities, and the honest answer for each one. One of them is going to look a lot like you.

Retiree #1: Your Structure Already Works

The first retiree already did the quiet work — maybe on purpose, maybe by accident. They've got some money in a Roth, some in a regular brokerage account, some in a pre-tax account. The pre-tax pile at 73 is manageable. Call it $500,000.

That's an RMD of roughly $19,000 in year one. Stack that on top of Social Security and maybe a small pension, subtract the standard deduction, and this couple is probably still sitting in the ballpark of the 12% marginal bracket.

If that's you — if your RMD plus Social Security keeps you inside the 12% bracket after deductions — you are definitely not the person that seminar was built for. Your structure is doing what it's supposed to do.

That doesn't mean you forget about RMDs entirely. But paying to convert money to Roth at anything above 12% could be a genuinely big mistake. You'd be prepaying taxes at a higher rate to avoid taxes at a lower one. Go enjoy your retirement.

Retiree #2: The Diligent Saver With One Giant Pre-Tax Bucket

This is the person I see most frequently, and it's where the fear gets sold the hardest.

This retiree did everything right. Maxed the 401(k) for 30 years. Saved hard. Stayed invested through every scare. Built real wealth — a million, a million and a half, two million, maybe more. But almost all of it is sitting in pre-tax accounts. One giant bucket.

They hear the word "RMD" and feel the floor drop.

David's "$300,000 Tax Bomb"

Let me tell you about David. He came to me at 62, about to retire. Smart guy, disciplined his whole life, with $1.2 million in his IRA. He'd been to one of these talks — or maybe just watched some YouTube — and he walked in talking about the tax disaster he had coming.

And on paper, the planning software agreed with him at first. It showed that if David converted aggressively to Roth in his early retirement years, he could save $300,000 to $400,000 in lifetime taxes. Three hundred grand. That's a big, scary, motivating number.

But I noticed something. David was living on $5,200 a month — on $1.2 million.

So instead of asking "how do I beat the IRS," we asked David a different question: what if you spent $8,000 a month instead?

He didn't love the question at first. He'd lived carefully his whole life. But we ran the scenarios, and here's what happened:

The RMD problem David thought he had almost completely disappeared.

When David spends what he can actually afford, he draws down that pre-tax bucket through his 60s on purpose. By the time he hits 73, he still has solid retirement savings — but the pre-tax balance is smaller, the forced withdrawals are smaller, and they never stack high enough to push him into the scary bracket he was bracing for.

The Tax Bomb Only Exists If You Never Spend the Money

Think about what this means. The tax bomb on the software was real — but it was a path that only existed if David kept hoarding.

The version of David who dies with $5 million? That's the one with the RMD problem. The version who spends, travels, fixes up the house, plays golf on a nicer course — that guy dies with closer to a million, still a respectable estate, and his RMDs were never in crisis mode.

Same David. Same retirement accounts. The only variable was whether he actually let himself live.

If you're the diligent saver with one giant pre-tax bucket, Roth conversions may absolutely belong in your plan. But run the spending question first. It's the cheapest tax strategy that exists.

Retiree #3: Already at RMD Age With a Big Pre-Tax Balance

Now the honest one. This is the retiree already in it — at or just before RMD age, big pre-tax balances, not much Roth, and not a lot of runway to change the shape of things.

For this person: yes, it may be too late to rebuild the buckets from scratch and convert at the low brackets you had in your 60s. But "too late for the ideal plan" is not the same as "nothing you can do."

If you give to charity, you can send money straight from your IRA to the charity as a qualified charitable distribution. It counts toward your RMD, never shows up as taxable income, and the limit is $111,000 per person in 2026. If you're charitably inclined at all, this is usually the first lever to pull.

And depending on your bracket picture, converting above the RMD amount in certain years can still make sense. It's situational — which is exactly why it deserves analysis, not a seminar pitch.

The Survivor Tax Trap Is the Risk Worth Taking Seriously

Here's the one issue people gloss over — and it's the one that actually bites.

When one spouse dies, the survivor doesn't just grieve. The following tax year, they go from filing jointly to filing single. The brackets tighten. The standard deduction gets cut in half. The same required distribution comes out of the same accounts — it's just taxed at meaningfully higher rates, and it can drive Medicare surcharges up along with it.

Now, some honesty here too: when a spouse passes, one Social Security check goes away and household expenses drop, so the overall impact is sometimes less dramatic than it first appears. But if you have a significant age gap between spouses, or one large IRA in one name, this is worth modeling before RMDs start — not after.

So… Do You Have an RMD Problem?

Three retirees, three honest answers:

1. Balanced buckets, 12% bracket: No. Stop bracing for a hit that isn't coming, and be skeptical of anyone selling you conversions above 12%.

2. Big pre-tax bucket, still in your 60s: Maybe — but spend first, then convert. The problem is often smaller than the software says once you live the retirement you saved for.

3. At RMD age with a large balance: Partially, but there are still real levers — QCDs, targeted conversions, and planning around the survivor trap.

Real retirement tax planning looks at all of it together: Roth conversion opportunities, your total balance sheet, your spending, and how it all interacts with current tax law. That's the work — not a scare pitch.

As a fee-only, fiduciary CFP® practice here on the South Shore, we don't sell products, so we have no incentive to invent a tax bomb you don't have — or to ignore one you do. If you'd like a second set of eyes on your RMD picture, schedule a free 30-minute consultation. We'll tell you which of the three retirees you actually are.

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