Seeing the RMD in a New Light: The Required Minimum Distribution and its Implications for Retired Portfolio Design
Craig L. Israelsen, Ph.D., Utah Valley University

The required minimum distribution (RMD) may often be viewed in a harsh light by investors who are forced to make the annually specified withdrawals. In reality, the RMD is a well designed withdrawal protocol that mathematically guarantees that a portfolio cannot be liquidated prior to the age of 116. In light of that, retirees with money in accounts which are governed by RMD guidelines should consider a broadly diversified, growth oriented asset allocation during their retirement years. This article analyzes the performance of four retirement portfolios ranging from no-risk to moderate risk during 25 rolling 25-year periods as RMD-based annual withdrawals were extracted. Based on this analysis, there is strong support for a growth oriented asset allocation during the post retirement years.