Millions of Americans spend decades building retirement savings, carefully watching their investments grow and avoiding unnecessary withdrawals. But once retirement begins, some continue treating those savings as money they should never touch.
A revealing study from J.P. Morgan Chase found that 84% of retirees who had reached required minimum distribution age were withdrawing only the minimum amount required by law. That figure is often rounded to roughly 85%, but the original finding was 84%.
At first, this might sound like a responsible financial decision. After all, keeping more money invested could help savings last longer and leave something behind for loved ones.
What the J.P. Morgan Study Revealed About Retirement Withdrawals
J.P. Morgan Chase examined retirement account behavior using data involving approximately 31,000 people approaching or entering retirement between 2013 and 2018.
The findings showed a strong tendency among retirees to preserve their savings rather than withdraw money voluntarily.
Among participants who had reached RMD age, 84% were withdrawing only the required minimum. Meanwhile, approximately 80% of those who had not yet reached RMD age had not taken distributions from their retirement accounts.
These findings describe the people studied during that period. They do not establish that 84% or 85% of all American retirees are currently making a financial mistake.
| Retirement Group | Study Finding | What It Suggests |
|---|---|---|
| Retirees at RMD age | 84% withdrew only the minimum | Many followed the required withdrawal amount |
| Retirees below RMD age | 80% had not taken distributions | Many delayed accessing retirement savings |
| Overall pattern | Retirement accounts were often left largely untouched | Preserving capital remained a priority |
The numbers raise an interesting question. Why do people spend decades saving for retirement but remain reluctant to use that money once retirement arrives?
For some, the answer involves taxes. Others want to protect their financial security or leave a meaningful inheritance.
Those can all be reasonable goals. The potential mistake appears when retirees follow RMD amounts automatically, without checking whether that approach actually supports their retirement plans.
Understanding Required Minimum Distributions Before Making a Decision
Required minimum distributions, commonly called RMDs, are annual withdrawals the IRS requires from certain retirement accounts.
These rules mainly apply to accounts funded with pretax money. Contributions may have reduced taxable income during working years, while investment earnings generally grew without annual income taxes.
Eventually, the government requires account owners to begin withdrawing some of that money. Those distributions are generally included in taxable income unless part of the withdrawal qualifies for different tax treatment.
Traditional IRAs, traditional 401(k)s, 403(b)s, governmental 457(b) plans, SEP IRAs, and SIMPLE IRAs generally fall under RMD rules.
Roth accounts are treated differently because contributions generally involve money that has already been taxed. Roth IRAs and designated Roth workplace accounts have no lifetime RMD requirement for their original owners, although beneficiaries face separate distribution rules.
When Do RMDs Begin?
Under the rules in effect in 2026, the starting age is generally 73 for people born from 1951 through 1959. For people born in 1960 or later, the starting age is 75.
Older retirees may have started distributions under previous rules. Certain employees can also delay RMDs from their current employer’s qualifying retirement plan while they continue working, subject to restrictions.
| Birth Year | General RMD Starting Age |
|---|---|
| 1950 or earlier | 70½ or 72 under earlier rules, depending on birth date |
| 1951–1959 | 73 |
| 1960 or later | 75 |
Most account owners must take their first RMD for the year they reach the applicable age, although they can generally delay that first payment until April 1 of the following year.
After that, annual RMDs are normally due by December 31. Delaying the first distribution can therefore mean taking two taxable distributions in one calendar year.
Missing a required withdrawal can also be expensive. The IRS generally imposes a 25% excise tax on the amount not withdrawn, potentially reduced to 10% after timely correction, with a waiver available in certain reasonable-error situations.
The important distinction is that an RMD represents the minimum amount the government requires you to withdraw, not the maximum amount you can safely use.
How a $500,000 Retirement Account Can Create a Growing Tax Obligation
The IRS calculates required minimum distributions using the retirement account balance on December 31 of the previous year and a life expectancy factor from the appropriate IRS table.
For most account owners, the calculation follows a straightforward formula:
Previous Year-End Account Balance ÷ IRS Distribution Factor = Annual RMD
Consider a 75-year-old retiree whose traditional 401(k) had a balance of $500,000 at the end of the previous year.
The IRS Uniform Lifetime Table assigns a distribution factor of 24.6 at age 75. Dividing $500,000 by 24.6 produces a required withdrawal of approximately $20,325.
That means the retiree must generally withdraw at least $20,325 during the year, even if Social Security or other income sources already cover household expenses.
Now consider what happens as the person gets older. The IRS distribution factor decreases with age, which generally requires withdrawing a larger percentage of the remaining account balance.
| Age | IRS Distribution Factor | RMD on a $500,000 Balance |
|---|---|---|
| 73 | 26.5 | $18,868 |
| 75 | 24.6 | $20,325 |
| 80 | 20.2 | $24,752 |
| 85 | 16.0 | $31,250 |
| 90 | 12.2 | $40,984 |
These figures assume the account balance remains $500,000 at each age and use the standard Uniform Lifetime Table. Actual RMDs depend on the previous year’s account balance and the applicable IRS table.
The larger withdrawal percentages become particularly significant when investment growth keeps retirement balances high.
For example, suppose the same retiree reaches age 85 with a traditional IRA worth $800,000 at the end of the previous year.
At age 85, the distribution factor is 16.0. The required withdrawal would be $50,000, even if that person needs far less money for everyday spending.
That $50,000 distribution could increase taxable income substantially. It might also affect other retirement expenses, depending on the retiree’s overall financial situation.
The Real RMD Mistake Is Treating the Minimum as a Spending Limit
A retiree who withdraws only the required minimum is not necessarily making a bad financial decision.
The problem begins when that minimum becomes an automatic spending rule, replacing a plan based on personal needs, financial resources, and retirement goals.
Suppose someone receives $30,000 annually from Social Security and has a traditional IRA producing a $20,000 RMD.
That person might decide that $50,000 is the maximum amount available for retirement spending, even while holding substantial additional savings.
But the IRS does not place that restriction on retirement account withdrawals. The account owner can generally withdraw more than the required amount, although additional taxable distributions may create higher taxes.
The real question should be whether spending more would improve retirement without putting long-term financial security at unreasonable risk.
Someone with substantial savings, low living expenses, and a carefully tested retirement plan might have room to enjoy experiences that were postponed throughout their working years.
On the other hand, someone facing high healthcare costs, limited savings, or a long expected retirement may reasonably choose to withdraw only the minimum.
The mistake is not taking the minimum. It is assuming the minimum automatically represents the right amount for everyone.
Why Fear of Running Out of Money Keeps Retirees From Spending
For people who spent 30 or 40 years saving consistently, retirement can require a difficult change in thinking.
During working years, financial success often means contributing more, spending less, and watching account balances grow.
Then retirement arrives, and those same people are expected to begin drawing down money they spent decades protecting.
That change does not always happen naturally. Many retirees continue seeing their retirement accounts as balances that should remain untouched whenever possible.
Some worry about a market downturn. Others fear expensive healthcare, long-term care needs, inflation, or living well into their 90s.
These concerns deserve serious attention because retirement can last several decades, and future costs are uncertain.
However, saving excessively out of fear can create another problem. A person may repeatedly postpone enjoyable activities even when a realistic financial plan shows there is room for them.
That might mean skipping family vacations, delaying home improvements, avoiding favorite hobbies, or refusing to spend money on experiences that become harder with age.
Protecting financial security matters, but so does understanding what that security is supposed to provide.
Retirement Spending Often Changes Between Your 60s and 90s
Retirement expenses rarely remain exactly the same throughout life.
Many retirees spend more on travel, entertainment, hobbies, and activities during their younger retirement years. They may still have the health, energy, and freedom to enjoy experiences that were difficult during their careers.
Later, some households naturally reduce spending on recreation and travel. Physical limitations, changing interests, or a preference for quieter activities can affect where money goes.
Financial planners sometimes describe these periods as the go-go years, slow-go years, and no-go years.
The descriptions are broad patterns rather than fixed rules. Some people travel well into their 80s, while others experience major health limitations shortly after retirement.
Healthcare and long-term care costs can also increase dramatically later in life, even when discretionary spending declines.
| Retirement Stage | Common Spending Priorities | Planning Consideration |
|---|---|---|
| Ages 60–69 | Travel, hobbies, home projects, family activities | Balance active spending with future income needs |
| Ages 70–79 | Recreation, family, healthcare, everyday comfort | Review withdrawals as lifestyle and expenses change |
| Ages 80–89 | Home support, medical care, transportation, personal assistance | Preserve flexibility for growing care needs |
| Age 90+ | Healthcare, living arrangements, daily support, personal comfort | Maintain dependable income and financial reserves |
These are illustrative age ranges, not predictions about an individual’s health or spending.
The concern with relying entirely on RMDs is that minimum withdrawal percentages rise with age, even though some retirees may want to spend less on travel and other activities later.
That can create a mismatch between the timing of withdrawals and the years when spending would have brought the greatest personal benefit.
A well-designed retirement plan should consider those differences instead of assuming that the IRS withdrawal schedule reflects a retiree’s changing lifestyle.
Taking Only the Minimum Can Actually Be a Smart Tax Strategy
There are several situations where limiting withdrawals to the required minimum makes financial sense.
One of the biggest involves income taxes. Distributions from traditional retirement accounts generally increase taxable income, and larger withdrawals can raise the total tax bill.
Suppose a retiree has enough money from Social Security, a pension, and taxable savings to comfortably cover living expenses.
Taking another $30,000 from a traditional IRA beyond the required minimum might create taxes without providing any immediate benefit.
In that situation, leaving the additional money invested could be sensible.
Larger traditional account withdrawals can also affect how much Social Security income is taxable. For some retirees, higher income may lead to higher Medicare Part B and Part D premiums through income-related adjustments.
That makes withdrawal planning more complicated than simply deciding how much money someone wants to spend.
| Reason to Take Only the RMD | Why It Might Make Sense | What to Check |
|---|---|---|
| Keeping taxes manageable | Additional withdrawals may increase taxable income | Current and future tax brackets |
| Preserving retirement assets | More funds remain invested for later years | Portfolio risk and future expenses |
| Covering spending from other income | Pension or Social Security may already provide enough | Total household cash flow |
| Leaving an inheritance | Remaining assets may pass to beneficiaries | Heirs’ future taxes and withdrawal rules |
| Preparing for healthcare expenses | Savings remain available for unpredictable costs | Insurance, long-term care, and emergency reserves |
Taking only the minimum becomes a reasonable decision when it supports a broader financial plan.
The danger comes from choosing that amount automatically, without considering whether a different withdrawal pattern could improve taxes, retirement income, or personal enjoyment over time.
Large Traditional IRA Balances Can Become a Tax Problem Later
Leaving money invested for longer can allow a retirement account to grow. However, that growth can also produce larger required withdrawals in later years.
Consider someone who retires at 65 with a substantial traditional IRA but avoids distributions until RMDs become mandatory.
If investments perform well, the account could be considerably larger by the time required withdrawals begin.
The retiree may then face taxable distributions that are larger than the amount needed for household expenses.
There is nothing inherently wrong with maintaining a large retirement balance. The financial issue is whether delaying withdrawals actually produces the best long-term tax result.
Some retirees may benefit from voluntarily withdrawing money during lower-income years before RMDs begin.
Others may consider partial Roth conversions, which generally create taxable income in the conversion year but can reduce future traditional account balances.
A Roth conversion also has important restrictions. The amount required as an RMD cannot itself be converted into a Roth IRA. The required distribution must be satisfied first.
These approaches are not automatically beneficial. A conversion or voluntary withdrawal could increase taxes, Medicare premiums, or other income-related costs in the year it occurs.
The goal should be comparing several years of possible tax outcomes rather than focusing only on keeping this year’s tax bill as low as possible.
Retirement Money Does Not Have to Be Spent Just Because It Is Withdrawn
One common misunderstanding is that retirees must spend every dollar taken as a required minimum distribution.
That is not how the rule works. The IRS requires qualifying account owners to take money out of certain tax-advantaged accounts, but it does not require them to use that money for everyday purchases.
If a retiree receives a $25,000 RMD but only needs $10,000 for household expenses, the remaining money can be saved or invested outside the retirement account.
For example, after accounting for taxes, the retiree might place the remaining funds in a taxable brokerage account, savings account, or another appropriate investment.
The important point is that money does not have to disappear from the household’s wealth simply because it leaves a traditional IRA.
However, the withdrawal generally creates taxable income, and the remaining money no longer receives the same traditional IRA tax-deferred treatment.
For eligible retirees age 70½ or older, qualified charitable distributions from an IRA may offer another option. When completed under IRS rules, these direct charitable payments can satisfy some or all of an RMD without the qualified amount being included in taxable income.
This can be especially relevant for retirees who already make regular charitable donations.
Leaving More Money Behind Is Not Always the Best Inheritance Strategy
Another reason retirees withdraw only the required minimum is the desire to leave assets to children, grandchildren, or other loved ones.
For many families, creating financial security for future generations is an important goal. Keeping retirement savings invested may increase the amount eventually transferred to beneficiaries.
However, the type of account being inherited can strongly affect the financial outcome.
Traditional IRA distributions are generally taxable to beneficiaries, subject to applicable exceptions. That can create problems when adult children inherit large accounts during their highest-earning years.
Under current rules, many non-spouse beneficiaries must empty inherited retirement accounts by the end of the tenth year following the original owner’s death.
Some beneficiaries must also take annual distributions during that period, depending on when the original owner died and other circumstances.
Spouses and certain other eligible beneficiaries can qualify for different treatment.
Imagine an adult child inheriting a large traditional IRA while already earning a high salary. The required withdrawals over the following years could increase the child’s tax burden substantially.
In some cases, an older retiree who has access to lower tax brackets might be able to reduce the family’s combined lifetime tax burden by withdrawing more earlier.
In other situations, leaving the account untouched may still be the better choice.
Roth IRAs can offer different inheritance advantages because qualified withdrawals are generally tax-free, although beneficiaries must still follow applicable distribution rules.
