A 70-year-old sitting on a $1 million traditional IRA faces a deceptively simple question: how to draw down that balance over a retirement that could last 15 years or stretch well past 25. A sustainable approach depends on a handful of tax rules, longevity assumptions, and IRS provisions that, when combined, can help extend the purchasing power of every dollar inside that account. Getting the sequencing right matters more than most retirees realize, because the federal tax code rewards those who plan withdrawals with the same care they once applied to contributions.
When Required Distributions Begin and What They Cost
The first required minimum distribution must be taken for the year a taxpayer reaches age 73, according to the IRS’s RMD guidance. That initial withdrawal can be delayed until April 1 of the following year, but every subsequent RMD must be completed by December 31. A 70-year-old, then, has roughly three years before mandatory distributions begin, and that window is valuable planning time rather than dead space. Those years can be used to convert slices of the IRA to a Roth, accelerate voluntary withdrawals at lower tax brackets, or coordinate Social Security claiming so that taxable income is smoothed instead of spiking once RMDs arrive.
The IRS calculates each year’s RMD by dividing the prior year-end IRA balance by a divisor from the Uniform Lifetime Table in Publication 590‑B. The divisor shrinks with age, so the percentage withdrawn rises over time, pushing more income onto the tax return in later years. Before the SECURE 2.0 legislation, the penalty for a missed RMD was 50% of the shortfall; SECURE 2.0 cut that to 25%, with a further reduction available if the mistake is corrected quickly. The softer penalty is welcome, but it does not change the core math: once RMDs start, a $1 million IRA can shed tens of thousands of dollars a year in taxable distributions whether the retiree needs the cash or not, potentially increasing other income-based costs and taxes.
Qualified Charitable Distributions as a Tax Shield
One of the most effective tools available to a charitably inclined retiree is the Qualified Charitable Distribution, or QCD. The IRS notes that QCD eligibility begins at age 70½, which means a 70-year-old can start planning to use them even before RMDs kick in at 73. A QCD transfers money directly from an IRA to a qualifying charity, and the amount counts toward the year’s RMD obligation without being included in adjusted gross income. The distribution must go straight from the IRA custodian to the charity to qualify; if the retiree takes possession of the funds first, the tax advantage is lost and the withdrawal is treated as ordinary income.
The practical effect is significant. Every dollar routed through a QCD bypasses federal income tax entirely, which in turn can keep adjusted gross income low enough to avoid higher Medicare IRMAA surcharges and limit how much of a retiree’s Social Security is taxable. For tax year 2026, the top marginal rate remains 37% for high earners, but even middle-bracket retirees can find themselves pushed into a higher tier by RMDs layered on top of pensions and investment income. Because QCDs remove the distribution from the income calculation altogether, they can preserve valuable deductions and credits that phase out with higher income, while allowing retirees who no longer itemize to achieve a tax benefit from their charitable giving.
How a QLAC Shrinks the RMD Base
A Qualifying Longevity Annuity Contract, or QLAC, works on a different principle. Rather than reducing the tax on distributions, it reduces the balance from which RMDs are calculated in the first place. Under the IRS instructions for Form 1098‑Q, the value of a QLAC purchased inside a traditional IRA is excluded from the account balance used to determine RMDs before the annuity’s income start date, subject to statutory dollar and percentage caps. A 70-year-old who allocates a portion of a $1 million IRA to a QLAC immediately lowers the denominator in every future RMD calculation until the annuity begins paying out, typically at age 80 or 85, which can materially reduce forced withdrawals in the retiree’s seventies.
The strategy addresses the deepest fear in retirement planning: outliving savings. A QLAC converts a lump sum into contractually guaranteed lifetime income that begins later in life, precisely when other assets may be depleted. Because payments are deferred, insurers can offer higher monthly income per dollar invested than immediate annuities starting right away. The trade-off is illiquidity and the loss of market upside on the funds committed to the contract, along with the need to evaluate insurer credit strength. For a retiree whose primary concern is income certainty past age 85, however, a QLAC can effectively extend the IRA’s utility by carving out a second income stream timed to cover the most financially vulnerable years, while simultaneously trimming RMDs in the earlier phase of retirement.
Longevity Risk Is the Variable That Matters Most
Much of the conventional retirement advice assumes an “average” lifespan, but averages obscure the real risk. The Social Security Administration’s period life table used in the 2021 Trustees Report shows remaining life expectancy at exact ages by sex, and the numbers differ meaningfully for men and women. A 70‑year‑old woman, for example, has a longer expected remaining lifetime than a man of the same age, and both face a substantial chance of living well beyond the median outcome. A withdrawal plan that merely aims to exhaust the IRA at the “average” life expectancy therefore courts a serious shortfall if the retiree winds up among the many who live into their late eighties or nineties.
The SSA’s broader historical life tables underscore how survival probabilities at older ages have improved over time, and the Centers for Disease Control and Prevention’s life table research points in the same direction: longevity gains are gradual but persistent. For a 70‑year‑old with a $1 million IRA, that means the dominant risk is not dying “too soon” with money left over, but living long enough that inflation and market volatility erode the account faster than expected. Tools like QCDs and QLACs are best understood against this backdrop. QCDs can trim tax drag to preserve more after‑tax wealth for later years, while a QLAC can shift a slice of portfolio risk onto an insurer in exchange for guaranteed late‑life income. The more a retiree acknowledges the possibility of a 25‑ to 30‑year horizon, the more valuable these levers become in stretching the IRA across an uncertain but potentially very long retirement.
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*This article was researched with the help of AI, with human editors creating the final content.
Nathaniel Cross focuses on retirement planning, employer benefits, and long-term income security. His writing covers pensions, social programs, investment vehicles, and strategies designed to protect financial independence later in life. At The Daily Overview, Nathaniel provides practical insight to help readers plan with confidence and foresight.
