Serious Investing for Your 70s (Ages 70-79)

• Investment policy statement: In the 70s the policy statement names rules that run on a calendar. Common mistake: Writing the statement around investment returns while leaving the RMD amount and deadline out, so the first distribution slips to April and two taxable distributions land in one tax year.
• Research sleeve: In the 70s, required minimum distributions make the sleeve visible in a new way. Common mistake: Taking the RMD as an afterthought from whichever holding is convenient, which can force a sale of a sleeve position at a poor time or miss the deadline and its 25% penalty.
• Concentration management: At 70 to 79, required minimum distributions force sales, so a single large holding inside an IRA must be sold or distributed in kind to meet them. Common mistake: Holding a low-basis stock solely for the step-up in basis at death while the household depends on that one position for current spending and care costs.
• Tax location: Required minimum distributions start at 73 for those born 1951 to 1959, and the first can be delayed to April 1 of the following year, though that stacks two distributions into one tax year. Common mistake: Selling low-basis taxable holdings to fund spending while leaving a large traditional IRA untouched, ignoring that the taxable assets would receive a basis step-up and the IRA would be taxed to heirs.
• Rebalancing: In the 70s the required minimum distribution is a built-in rebalancing trade. Common mistake: Rebalancing within an IRA and reinvesting every dollar raised without first setting aside the required minimum distribution, which risks a missed RMD and the 25% penalty.
• Scenario testing: In the 70s, required minimum distributions turn part of every scenario into a fixed schedule: at 75 the Uniform Lifetime Table divisor is 24.6, so about 4% of a traditional balance must come out whatever markets do. Common mistake: Running the test on the starting balance without the required distribution, so the withdrawal rate after a decline looks lower than the one the tax rules actually require.
• Security research: By the 70s required minimum distributions are running, starting at 73 for those born 1951 to 1959, so research must ask whether a holding can be sold or distributed in kind without difficulty when the withdrawal falls due. Common mistake: Holding thinly traded or hard-to-value securities inside an IRA, then finding that a required annual distribution must be met by selling something else at an unfavorable moment.
• Exit rules: In the 70s, exit rules are partly set by law. Common mistake: Delaying the first RMD to April 1 and then taking the second in the same calendar year, which stacks two taxable distributions into one tax year.

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