Required minimum distributions for a 72-year-old with a $900,000 traditional IRA starting at age 73 total roughly $33,960 in year one (3.77% of portfolio), well below the 4% safe withdrawal rate, while a diversified portfolio targeting 7% annual returns generates $63,000 in growth, allowing the account to grow despite distributions.

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

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Most retirees dread the moment required minimum distributions kick in, picturing a forced liquidation that slowly bleeds a portfolio dry. The math tells a different story, and for a 72-year-old sitting on $900,000, it is a considerably more reassuring one.

Here is the situation in plain terms:

Key Detail

Value

Age

72 (turning 73, first RMD year)

Portfolio Value

$900,000

Account Type

Traditional IRA or 401(k)

Core Issue

Will RMDs drain the portfolio over time?

What Is at Stake

30+ years of purchasing power and estate value

Under the SECURE Act 2.0, the RMD age was raised to 73 for anyone born between 1951 and 1959, and will rise to 75 for those born in 1960 or later. So at 73, this is year one of mandatory withdrawals.

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The IRS Uniform Lifetime Table sets the divisor at 26.5 for a 73-year-old. Divide $900,000 by 26.5 and the first RMD is roughly $33,960, or about 3.77% of the portfolio.

That figure is smaller than the 4% safe withdrawal rate that retirement planners have used as a benchmark for decades. The RMD is not a crisis withdrawal. It is a modest, IRS-mandated distribution that most balanced portfolios can absorb without shrinking.

Here is where the math gets genuinely encouraging. A diversified portfolio targeting 7% annual returns on $900,000 would generate roughly $63,000 in growth in year one. The $33,960 RMD does not consume the annual return. The portfolio ends the year larger than it started, even after the distribution.

With the 10-year Treasury yielding 4.21% as of March 11, 2026, a blended 7% return assumption is reasonable for a portfolio with meaningful equity exposure. Treasuries alone offer a meaningful floor, and equities historically add the remaining premium.

Below is a simplified 10-year RMD schedule showing how the portfolio behaves assuming 7% annual growth and IRS Uniform Lifetime Table divisors. The portfolio balance shown is after each year's RMD is taken.

The portfolio does not shrink. It grows. RMDs increase modestly each year as the balance rises and the IRS divisor decreases, but the annual distribution never overtakes the growth engine of a properly invested account.

Two SECURE Act 2.0 updates matter here beyond the age change.

First, the excise tax for missing an RMD dropped from 50% to 25%, and falls further to 10% if the mistake is corrected within two years. This is not a reason to miss distributions, but it does reduce the catastrophic penalty risk that once terrified retirees.

Second, Roth 401(k) accounts no longer require RMDs as of 2024. If any portion of the $900,000 sits in a Roth 401(k), it is exempt from this calculation entirely. That changes the withdrawal math and potentially reduces taxable income in retirement.

The genuine threat to this portfolio is not the RMD schedule. It is purchasing power erosion over a 20-to-30-year retirement. Core PCE inflation has been running near the 90th percentile of historical readings. meaning real purchasing power is eroding faster than most retirees plan for. Fixed dollar withdrawals lose real value every year inflation runs above 2%.

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

Roth 401(k) accounts are exempt from RMDs under the updated rules, which can affect total taxable income calculations for retirees who hold a portion of savings in those accounts.

Portfolio allocation relative to the 7% growth assumption is a key variable in whether the math above holds. If a current mix of stocks and bonds is not positioned to generate returns above the RMD withdrawal rate, the projection changes. A fee-only advisor can help stress-test the allocation given the current rate environment.

Some retirees pursue Roth conversions to minimize future RMDs, though the benefit depends on individual tax situations and portfolio growth rates. If the portfolio is growing through distributions anyway, the urgency of that strategy may be limited.

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