Is $900,000 enough to exhaust RMDs? At age 73, the math is more reliable than you think

• The minimum distribution for a 72-year-old with a $900,000 traditional IRA starting at age 73 is about $33,960 (3.77% of the portfolio) in the first year, well below the 4% safe withdrawal rate, while a diversified portfolio grows to $600, despite targeting annual returns of 7%, despite allowing for a growth account. Distribution

• The SAFE Act 2.0 raised the RMD age to 73 and reduced penalties for missed distributions from 50% to 25%, while making Roth 401(k) accounts completely exempt from RMDs, fundamentally changing the withdrawal math for retirees.

• An analyst named NVIDIA just named his top 10 AI stocks in 2010. Get it for free here.

Many retirees dread the moment when minimum distributions are required, picturing forced enthusiasm that slowly drains the portfolio. The math tells a different story, and for a 72-year-old man sitting on $900,000, it’s pretty reassuring.

Here is the situation in clear terms:

Under the SAVE Act 2.0, the RMD age is raised to 73 for anyone born between 1951 and 1959, and to 75 for those born in 1960 or later. So at 73, it’s a year of forced withdrawal.

READ: The analyst named NVIDIA in 2010 Just naming his top 10 AI stocks

The IRS Uniform Life Time Table sets the divisor at 26.5 for age 73. Divide $900,000 by 26.5 and the first RMD is approximately $33,960, or about 3.77% of the portfolio.

That number is smaller than the 4% safe withdrawal rate that retirement planners have used as a benchmark for decades. An RMD is not a crisis withdrawal. This is a modest, IRS-granted distribution that most balanced portfolios can absorb without going broke.

Here’s where the math gets really exciting. A diversified portfolio targeting a 7% annual return on $900,000 will grow by approximately $63,000 in the first year. The $33,960 RMD does not consume the annual return. The portfolio ends the year bigger than the start, even after the split.

With the 10-year Treasury yielding 4.21% through March 11, 2026, the 7% return assumption is appropriate for a portfolio with meaningful equity exposure. Only Treasuries offer a meaningful floor, and equities historically add a residual premium.

Below is a simple 10-year RMD schedule showing how the portfolio behaves assuming 7% annual growth and the IRS Uniform Life Time Table divisor. The portfolio balance is shown after taking each year’s RMD.

The portfolio does not shrink. It is growing. RMDs grow moderately each year as balances increase and IRS deductions decrease, but annual distributions never reach the growth engine of a proper investment account.

Two Safeguard Act 2.0 updates are important beyond the age change.

First, the excise tax on missing RMDs is reduced from 50% to 25%, and if the error is corrected within two years, it drops to 10%. This is not a reason to lose distributions, but it does reduce the risk of catastrophic penalties that once scared retirees.

Second, Roth 401(k) accounts no longer require RMDs until 2024. If any part of the $900,000 is in a Roth 401(k), it is completely exempt from this account. This changes the withdrawal math and potentially reduces taxable income in retirement.

The real threat to this portfolio is not the RMD schedule. This is the erosion of purchasing power in 20 to 30 years of retirement. Core PCE inflation is running near 90 percent of historical readings. That means real purchasing power is fading faster than planned for many retirees. Fixed dollar withdrawals lose real value every year inflation goes above 2%.

This is why portfolio allocation is more important than RMD scheduling. A retiree who parks $900,000 in cash or short-term bonds to “play it safe” faces a different kind of disaster: the slow erosion of what each dollar buys.

1. Roth 401(k) accounts are exempt from RMDs under the new rules, which could affect the calculation of taxable income for retirees who have a portion of their savings in these accounts.

2. The portfolio allocation associated with the 7% growth assumption is a key variable in whether the above math holds. If the current mix of stocks and bonds is not positioned to return above the RMD withdrawal rate, the estimate changes. Only a fee advisor can help with an allocation stress test taking into account the current pricing environment.

3. Some retirees pursue a Roth conversion to reduce future RMDs, although the benefit depends on individual tax circumstances and the portfolio’s growth rate. If the portfolio is growing through distribution anyway, the urgency of this strategy may be limited.

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