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Retirement > Living in Retirement > Your Choices

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Your Choices

Here are some common member questions about choices you face when taking income in retirement.

RMDs
Required Minimum Distributions (RMD) start at age 70½ for most qualified retirement accounts. This means you must take a minimum amount of money out of a plan, either once a year or throughout the year, or face tax penalties.

To calculate your maximum RMD, first visit the IRS Uniform Life Expectancy Table.

Find the Life Expectancy Factor that matches your age.
Then, find out how much your traditional IRA (or other qualified plan) was worth at the end of last year.
Finally, divide that amount by your Life Expectancy Factor.

Here are some other important facts:

RMDs apply to most qualified retirement plans including 401(k)s, 403(b)s, SEP-IRAs, SIMPLE IRAs and Keoghs. All of these plans require that you take a distribution starting at age 70 ½.

RMD rules vary slightly for traditional IRAs. Here you may combine RMDs and take the entire amount out of one account.

You may make periodic withdrawals throughout the year rather than taking the entire RMD at once.

RMD rules do not apply to Roth IRAs during the taxpayer's lifetime, but do apply after death.

Note that different calculation rules apply when a spouse is sole beneficiary and is more than 10 years younger than the account owner.

Social Security and Medicare
You'll need to apply for Social Security three months prior to the month of your 65th birthday, or three months before you want to start collecting benefits. At the earliest, you may apply at 61 years and 9 months of age. (Note that benefit reductions will apply depending on your full retirement age and personal situation.)

Because the rules can be complicated, it’s a good idea to speak with a Social Security representative in the year before you retire.

Also, depending on your age and whether you're receiving or plan to receive Social Security, the rules around applying for Medicare will vary. Visit the Medicare web site for detailed information.

Ways to protect your loved ones
If you haven’t done so recently, ask a professional to review your will, powers of attorney, beneficiary designations, insurance and investment plans. This important step will help ensure that you and your loved ones are cared for in any event.

Generating Income in Retirement

Find out how.

Calculator: Variable Annuities

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