“The Stupidest Thing I Ever Heard”: Suze Orman on Why Waiting Until RMDs Are Required Wrecks Retirement
Key takeaways
- On her October 10, 2024 podcast, a 65-year-old retired caller named Deb said her financial advisor had instructed her to leave her $125,000 TSP alone and wait until required minimum distributions forced her to touch it.
- If you are between 60 and 72 with money sitting in a traditional 401(k), 403(b), TSP, or IRA, that single piece of advice can cost you tens of thousands in lifetime taxes.
- For most pre-retirees, the years between leaving work and the RMD start date are the lowest-tax window of your life.
On her October 10, 2024 podcast, a 65-year-old retired caller named Deb said her financial advisor had instructed her to leave her $125,000 TSP alone and wait until required minimum distributions forced her to touch it. Suze s response: "the stupidest thing I ever heard."
If you are between 60 and 72 with money sitting in a traditional 401(k), 403(b), TSP, or IRA, that single piece of advice can cost you tens of thousands in lifetime taxes. Suze is right, and the math is not subtle.
For most pre-retirees, the years between leaving work and the RMD start date are the lowest-tax window of your life. The paycheck stopped. Social Security may not have started yet. You are sitting in the 12% or 22% federal bracket instead of the 24% or 32% bracket you lived in during peak earning years. That gap is the whole opportunity.