Why Retirees With $1.4 Million Are Taking $60,000 a Year at 62 Instead of Waiting for a $100,000 RMD at 73

Why Retirees With $1.4 Million Are Taking $60,000 a Year at 62 Instead of Waiting for a $100,000 RMD at 73

Jake FitzGerald

Sat, September 12, 2026 at 2:10 AM GMT+3 5 min read

Quick Read

• Drawing $60,000 yearly from a $1.4M 401(k) at 62 keeps a married couple inside the 12% tax bracket, avoiding a $100,000 RMD at 73.

• Large RMDs at 73 can push effective marginal rates near 40% by making 85% of Social Security taxable and triggering IRMAA Medicare surcharges.

• Pairing early withdrawals with Roth conversions eliminates future RMDs on converted dollars and shields retirees from IRMAA surcharges starting at 65.

• Read More: Learn 7 ways to generate income with a $1,000,000+ portfolio (sponsor)

A 62-year-old couple with $1.4 million in a traditional 401(k) faces a decision most peers delay: start drawing now, or let the account compound until the IRS forces the issue at 73. The case for taking roughly $60,000 a year starting at 62 has become one of the strongest in retirement planning, driven entirely by tax brackets.

Under SECURE 2.0, required minimum distributions begin at age 73. Leave $1.4 million alone for 11 years at reasonable growth and the balance realistically reaches $2.7 to $2.9 million. The first RMD, calculated with a Uniform Lifetime Table divisor of 26.5, lands near $100,000 and rises from there.

That $100,000 does not arrive alone. It stacks on top of Social Security (which grows every year it is delayed, and gets another 3.1% COLA tracking for 2027), plus interest from bonds and CDs, plus any dividends in a taxable account. With the 10-year Treasury near 4.77%, fixed-income income alone can be meaningful.

Why the 12% Bracket Is the Cheapest Money You Will Ever See

For a married couple filing jointly in 2025, the 12% bracket runs up to $96,950 of taxable income, and the 22% bracket does not begin until $96,951. Before Social Security starts, a $60,000 traditional 401(k) withdrawal, after the standard deduction, sits comfortably inside that 12% zone.

Wait until 73 and the picture inverts. A $100,000 RMD plus Social Security plus investment income pushes the couple into the 22% bracket, which extends to $206,700. The real cost is the cascade that follows.

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A Cascade Nobody Prices In

Once combined income crosses the Social Security taxation thresholds, up to 85% of the benefit becomes taxable. Once income crosses the first IRMAA tier, Medicare Part B and Part D premiums add roughly $70 to $400 or more per person, per month, on a two-year lookback. A retiree in the 22% bracket often pays an effective marginal rate near 40% on the last dollars of that RMD.

Pulling $60,000 a year from 62 to 72 drains the traditional balance before RMDs magnify it, uses up the 12% bracket every year, and leaves room for Roth conversions without triggering IRMAA before Medicare starts at 65. That gap between the last paycheck and the first required withdrawal may be the lowest tax rate a retiree ever sees again, and we sized it up in detail in a free Roth window guide.

Is $60,000 Enough to Live On?

The Bureau of Labor Statistics puts average annual household expenditures at $78,535 for 2024. A $60,000 401(k) draw covers part of the retirement budget and bridges to Social Security, which most planners argue is worth delaying to 70 for the 8% annual credit. Cash needs beyond that can sit in short instruments; the national average 12-month CD yield sits around 1.7%, though top online banks pay several times that.

[financial_calculator type="withdrawal-rate" portfolio_value="1400000" withdrawal_rate="4.3" rate="6" time="11"]

Run at a 6% return, a 4.3% withdrawal from $1.4 million over 11 years preserves the portfolio while reshaping what the IRS can claim later.

What to Do Before Year-End

1. Map your 12% bracket capacity every year from 62 to 72. For MFJ in 2025, that is $96,950 of taxable income plus the standard deduction. Any unused room is a permanent tax cut you forfeit.

2. Pair withdrawals with Roth conversions in the same year. If you only need $40,000 to live on, convert the rest of the 12% bracket to Roth. Those dollars never generate an RMD and never count toward IRMAA.

3. Watch the two-year IRMAA lookback starting at age 63. Medicare premiums at 65 are based on your 63-year-old tax return. Front-load conversions at 62 when possible to avoid raising premiums.

The 62-to-72 window is the single most valuable tax planning decade most retirees will ever have. Ignoring it hands the bill to your 73-year-old self at a higher rate.

Learn 7 Ways To Generate Income With A $1,000,000+ Portfolio

If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.

Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)

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