BlackRock’s Chip Castille argues that in light of the new realities of people working longer and retiring later, we should consider raising the required mandatory distribution (RMD) age from 70-1/2 to 75-1/2.
Two big realities face people looking to retire: (1) they may not have saved enough; and (2) the little they have saved has to last longer than in the past. Whether by choice or necessity, more people are working longer, especially with the plethora of non-labor and non-industrial jobs. So why force people to take distributions when they are still saving for retirement?
Benefits of a delayed RMD date include:
• more time to pay into personal retirement accounts;
• more cash flowing into Social Security and Medicare;
• a shorter retirement to fund; and
• potentially extending exposure to professional management and market growth by keeping assets in retirement accounts and 401(k) plans.
Not mentioned: the loss of tax revenue to the U.S. Treasury, arguably the key element to lawmakers on Capitol Hill, in whose hands this decision would ultimately rest.
What do you think of the idea? Share your perspective in the comment box below.
