Your opinion about USAA is yours, but how RMDs are computed belong to the IRS. RMDs are based solely on two factors: how much money is in your account [regardless where it’s located], and your projected, remaining lifespan. They are forced on us by the IRS beginning the year after you turn 70.5 years of age. I really hate having to take an RMD!!! Never intended to spend a dime of my 401K and retirement accounts: my wife is 10 years, 15 days younger than me, so I intended to leave her the maximum amount possible. But no, the IRS disagrees. If you have money in retirement accounts, your money ahead to invest it in an Annuity. Those aren’t affected by RMD, as I understand it. With today’s economy, impacted by the Pandemic and its associated factors, no financial company can provide sufficient income to offset an RMD’s impact. The income can’t build up enough at government bond or stock market returns today. As an example, let’s assume you have $500,000 in a 401K in an account combining government bonds and stocks [only because that mix is quite common]. While government bonds are 100% safe, older folks who qualify for a force-issued RMD, they only generate around roughly 1-2% these days; as we all know, the DOW, S&P, International Funds, and others are tanked with double-digit negative returns [round them off to -25% in general over the last 1-2 years]. That imaginary $500K, invested in government bonds only will generate $50-$60 per business day. But if our assumption about money in your account is for a male 73-77 years old, the IRS rules force your account holder forces that company to send you a figure somewhere around $18-20,000 for the year [whether issued in a lump sum, or monthly distribution]. Your exact age dictates how much you’re forced to take; and it’s based on current age and national average lifespan remaining. Whether your wife is younger/older/same age is not a factor. At best, that imaginary $50K will generate $13,000 [more or less; depending on how it’s invested]; any percentage in stocks right now means you lose….bigtime! Your example 401K is metered out at a rate [based on today’s market situation] just can’t rebuild fast enough to offset that RMD. This example is actually a “best case” scenario: you should expect your savings to deplete worse, and faster until the economy heals itself. The naysayers who rant about today’s economy do have a glimmer of truth, but the economy is actually better than many say and feel. The price of everything generates a mistaken belief we’re in a terrible state. But that’s mostly due to Russian invasion; disrupted supply chains; expensive transportation costs; unavailability of workers to fill job vacancies [don’t forget that there are 1.67 jobs available for working age Americans right now, but too many won’t take the jobs]; and competition to buy the available items. There’s also the issue of price gouging, but that’s a different issue all its own. The only reason I didn’t convert everything to Annuities long ago is my wife feels since Annuities don’t actually “earn” money, she didn’t want to go that route. And since my retirement accounts are only for her, I didn’t go with Annuities to lock in income. Rats!!
