This Is the Biggest Mistake You Might Make With Your Next RMD

Don't fall into a common trap.When you choose to save for retirement in a traditional IRA or 401(k), you get the benefit of tax-free contributions. On the other hand, you don't get the most flexibility with your money. Not only do you have to wait until age 59 and 1/2 to start tapping your savings or else face early withdrawal penalties, but you also have to start taking required minimum distributions (RMDs) once you turn 73 or 75, depending on the year you were born. Image source: Getty Images. If you're on the hook for an RMD this year, you might tell yourself you might as well make the most of that mandatory withdrawal. But if you don't need the money, spending it could be a huge mistake. You may not have a need for your RMD today. But what if you run into a string of home repairs in three or four years? Or what if you eventually end up needing to pay for long-term care without insurance? Suddenly, the money you were forced to withdraw now could come in very handy later. For this reason, don't force yourself to spend your RMD. There's nothing wrong with using the money to treat yourself to something nice. But if there's nothing in particular that speaks to you, don't just blow through the RMD because the money had to come out of your retirement plan. Instead, save or invest it. Use to start a CD ladder, purchase bonds, or even buy some broad market exchange-traded funds, which might help that money grow. It's annoying enough to have to remove funds from your retirement savings when you don't want to. But don't squander an opportunity to put that money to work if you can't identify a meaningful way to use it.Read NextFeb 10, 2026 •By Marc GubertiLittle Rock Is Winning Over Retirees With Low Costs and Big-City AmenitiesFeb 10, 2026 •By Kailey Hagen, CFPA 100% Return on a 401(k) Investment Is Possible. Here's HowFeb 10, 2026 •By Maurie Backman3 Reasons You're Falling Behind on Retirement Savings -- and What to Do About ThemFeb 10, 2026 •By Christy BieberSocial Security Is Making a Major Change on March 7Feb 10, 2026 •By Kailey Hagen, CFP5 Reasons Florida Really Is the Best State to Retire InFeb 10, 2026 •By Bram BerkowitzStatistics Say: This Is the Best Age to Claim Social SecurityAbout the AuthorMaurie Backman is a contributing Motley Fool retirement and Social Security expert with more than a decade of experience writing about personal finance, investing, and retirement planning. Maurie previously worked in finance analyzing distressed companies. She studied finance at Binghamton University.TMFBookNerd