The Required Minimum Distribution (RMD) formula is changing for the first time in decades, and this change could mean good news for seniors. The new formula will lower the amount that seniors must withdraw from their retirement accounts each year. This change could allow seniors to keep more of their money in their accounts and potentially grow their nest eggs.
The RMD formula is used to calculate the minimum amount that seniors must withdraw from their retirement accounts each year. The current formula is based on life expectancy, but the new formula will be based on a person’s age. Under the new formula, the minimum withdrawal for someone who is 70 years old will be 3.65% of their account balance. This is lower than the current 4% withdrawal rate for someone who is 70 years old.
The new RMD formula is just one of several changes that have been made to retirement planning in recent years. The government has also changed the rules around 401(k)s and IRAs, and there have been several changes to Social Security. These changes can be confusing, but it’s important for seniors to stay up-to-date on the latest rules. A financial advisor can help seniors navigate the changes and make the best decisions for their retirement.