What Are 7 Strategic Ways for Retirees to Use Their Required Minimum Distribution (RMD)?

A required minimum distribution (RMD) is the minimum amount you must withdraw from certain retirement accounts annually

If you're fortunate enough not to need your RMD to pay bills, you may wonder other ways to use the funds, given current economic conditions

Here are seven of them, in today's financial world

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Reinvest One nice thing being retired is that you may have more time to re investments

If you don't have an immediate need for your RMD withdrawal, consider re it in an investment you're interested in and plan to hold on to for the long term (an important development)

Since RMDs are specifically designed to ensure you pay taxes on funds you once invested with pre-tax dollars, you'll have a tax bill due (remarkable data)

But once those funds have been set aside or the taxes have been paid, put the remainder to work for you by making a solid investment

Reduce debt If you have pesky debts hanging around, use RMDs to eliminate them

Conversely, Suppose you were fortunate enough to purchase a car before interest rates increased

Nevertheless, You may think paying off debt with a lower interest rate makes no sense, considering recent developments

Meanwhile, However, jettisoning the financial burden could be the smart move if debt stands between you and an easily achievable monthly budget

Moreover, Recast your mortgage Consider recasting your mortgage

However, Un refinancing, recasting a mortgage does not change your interest rate (remarkable data), given the current landscape

So, if your current mortgage rate is 5, in today's financial world

The loan term remains the same, so if you had 20 years left on your original term, that's the term used to calculate the new payment

On the other hand, The lender recalculates your monthly mortgage payment based on a new, lower balance, amid market uncertainty

For example, if you purchased your five or 10 years ago, your balance is lower today than when you first bought the perty, amid market uncertainty

In contrast, In addition, the lump sum payment is subtracted from your remaining balance

Once recasting is complete, you'll pay your new, lower monthly payment

Create a healthcare account According to a CBS report, retirees are often surprised by how much they spend on out-of-pocket medical expenses

Even for Medicare recipients with Part A and Part B, plenty of services are not covered, including dental, vision, hearing aids, prescription drugs, and copays

However, For that coverage, seniors must pay extra, and even with extra coverage, there are still out-of-pocket costs

Furthermore, To avoid a major blow from surprise medical costs, you may want to tuck this year's RMD into an account explicitly earmarked for such expenses (something worth watching)

On the other hand, Pad your emergency account Speaking of surprises, look at your emergency fund to determine whether it can use some padding

If you don't have enough money put away to cover three to six months' worth of expenses, your emergency fund could be the perfect destination for this year's RMD

Invest in education If you're itching to help grandchildren pay educational expenses, you can either contribute to a parent-owned account or open an account of your own and reap the tax benefits

Do something kind for yourself There's a relatively new trend reers call the "retirement consumption puzzle. " After years of hard work and saving, many retirees appear anxious the jobless years ahead and continue to every dollar they can

Meanwhile, If you're easily paying your bills and your budget looks fine on paper, think giving yourself a break

Buy that hot tub you've always wanted, take the vacation you've always dreamed of, or hire a contractor to add safety features that will allow you to age safely in place

On the other hand, Just do something that makes you happy, amid market uncertainty

Given the number of things in this world that can't be controlled, it's good to know that you have options when it comes to RMDs, in this volatile climate

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