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Draining IRAs Too Soon Poses Big Risks

Saturday, May 18, 2013 - 12:41 PM
From Market Watch: 
Americans between the ages of 61 and 70 are withdrawing money from their IRAs in amounts that are larger, both in absolute dollar amounts and as a percentage of their IRA account balance, than those taken by older households, according to a new report from the Employee Benefit Research Institute.

And what’s especially troubling about that finding is this: IRA owners under the age of 70½ are not even legally required to start taking required minimum distributions (RMDs) from their IRAs. Under current tax rules, traditional IRA account holders are only required to start taking withdrawals from their IRAs no later than April 1 of the year following the year in which they reach age 70½.

According to the EBRI report, Americans between the ages of 61 and 70—the so-called pre-RMD crowd—withdrew on average $16,655 per year from their IRAs, while those between the ages of 71 and 80 withdrew $10,557. What’s more, the pre-RMD Americans spent most of their IRA withdrawals on regular expenses, while the post-RMD set actually saved some of their withdrawal in CDs and the like.

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3
pearlbrownpearlbrown1,431 posts since
Nov 2, 2010
Rep Points: 6,249
1. Sunday, May 19, 2013 - 9:30 AM
Something is wrong here or the average IRA owner must have paltry amounts in their IRAs.  Are they using the RMD tables to figure out what they have to withdraw?  If so, and all they are having to take is approximately $10,557.00 that shows that they have really small IRAs.  Then again, everyone does not put all their savings into IRAs.  Let's hope they have other savings they can count on too.
1
paoli2paoli21,370 posts since
Aug 10, 2011
Rep Points: 6,004
2. Sunday, May 19, 2013 - 9:45 AM
10577 =s about 3 to 3.5 percent depending on ones age  starting balance would be approx  350k we are not all rich like you pa and did not mention cerebal palsy waiting for your pithy response
2
timothy2c4v7timothy2c4v73 posts since
May 19, 2013
Rep Points: 6
3. Sunday, May 19, 2013 - 9:55 AM
Timothy:  So glad to hear from you again.  BTW, do you know that you give your real self away by how many posts are under your name?  I know who you are so why don't you just post Anony or keep the "Really" name etc. etc.?

BTW, I agree with you on the 350K figure but that is still not enough for someone in this day and age, imo.  Then again, I forgot.  Aren't you the one who doesn't feel we need to care for our loved ones?  Just kick them out in the streets no matter what problems they have?  For you, 350K with social security and a paid up house should do you fine as long as you don't want to travel much.  If you also have medical problems, maybe you can get more government help so you don't need as much savings or shouldn't have much in that case.  Have a nice day, Tim.
1
paoli2paoli21,370 posts since
Aug 10, 2011
Rep Points: 6,004
4. Sunday, May 19, 2013 - 4:37 PM
jumping josaphat will match my brokerage account statement any time or place see you at the taj all expenses paid 5 ten stud poker table 42 seat 8 ask for gregorio  at least i do not dream of the matterhorn  or the bobbies in london or macadamia farms in hawaii mahalo hope the CP IS NOT TO BAD THESE DAYS
1
MATHEW1924MATHEW19242 posts since
May 19, 2013
Rep Points: 5
5. Sunday, May 19, 2013 - 6:18 PM
Mathew:  Who is CP??  Thanks for the invite but I don't have time to travel any more.  BTW, I do not dream of all those places.  I have actually been to all of them. They "were" my dreams and my goals and I saw to it that they came true.  As for your brokerage statement that is none of my business.  Don't take my posts so personally.
1
paoli2paoli21,370 posts since
Aug 10, 2011
Rep Points: 6,004
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