When you need to check a math problem, you confidently reach for a calculator. When it comes to taking required minimum distributions from tax-advantaged retirement accounts, things aren’t so simple.

There are nearly two dozen popular required minimum distribution calculators available online today, according to a new study from Trigg Thorstenson, founder of SimpleRMD, which provides its own calculator and tracking service. Most are adept at running the basic numbers for a single client with one tax-deferred account, but things get trickier when someone has significant wealth across multiple accounts. Guidance about RMDs is highly valued by clients, but advisors need to be double-checking their math.

“There are no flawless RMD tools out there that eliminate the complexity in this type of planning,” Thorstenson said. “Our goal with the study isn’t to declare a winner. It’s to bring transparency and to help every tool we’ve examined, including ours, get better.”

High Stakes Math

The stakes are high when calculating RMDs, as the IRS imposes a 25% penalty on amounts not withdrawn. But if corrected early, the penalty may be reduced to 10%.

Where did some of the tools fall flat?

• All passed the control scenario of tabulating RMDs for a 76-year-old with one IRA.
• But some had trouble navigating ambiguity in the tax law created by a drafting error in the Secure 2.0 Act applying to people born in 1959.
• IRS regulations have resolved the glitch by declaring that anyone born in 1959 must begin taking their required minimum distributions at age 73, which 10 of 21 tools acknowledged. Eleven tools were silent or could not accept the scenario.

Other areas where problems arose included calculating RMDs on inherited IRAs and calculating RMDs when a client has a spouse who is at least 10 years younger. Just one tool in 21 aced the test (it wasn’t SimpleRMD’s own).

Peer Review. The results of Thorstenson’s analysis resonated with Laura Varas, CEO and founder of Hearts & Wallets, which recently rebranded to H&W. “H&W has been benchmarking advice experiences since 2012,” she said. “There are many inconsistencies, as Trigg demonstrated, and across many aspects of advice and guidance.”

In one H&W review, a public retirement calculator from a major financial provider suggested that a mid-50s couple with income of $200,000 a year, $800,000 of investible assets and no debt would need to save $131,000 more a year to be “safe” for retirement.

“It seems excessive, and what are they supposed to do to achieve that? Live under a bridge?” Varas asked. “There are no single right answers to these planning questions. Many answers can be right, depending on individual situations, and some public tools need to address potential bad answers.”

To claim Social Security early or not to claim Social Security early, that is the question.

And while it may not be as stressful as the ones Hamlet was grappling with, it’s a challenging one for many people, even if they understand how the government benefits work. While nearly 70% of the 1,500 non-retired Americans surveyed by Schroders understand that waiting would result in bigger checks, 45% plan to tap their benefits before age 67, which is currently the full retirement age for those born in 1960 or later. Only 10% said they plan to wait until 70, when benefits hit their maximum.

The results suggest there is a meaningful gap between understanding a concept and acting on it, said Deb Boyden, head of US defined contribution at Schroders. But the issue is more nuanced than simple awareness of how waiting increases monthly checks.

“People may understand the trade-off, but other factors often influence their decision,” Boyden said. “Financial pressures, concerns about the future of Social Security, health considerations or simply wanting access to benefits sooner can all play a role.”

SS Soliloquy

Of those who said they would start receiving Social Security before 70, 45% need the money earlier for regular income and 43% want access to the money ASAP. Four in 10 worried that the Social Security Administration may run out of money or halt payments.

While waiting can result in larger checks, it’s not always the best move. In fact, 14% of the survey respondents said that they were advised to take Social Security earlier than 70.

“Claiming earlier may make sense if you need the income, have limited savings or other income sources or have health concerns,” said Chandler Riggs, a financial consultant at Fidelity Investments. She recommends considering several factors:

• Taxes, to start, since up to 85% of your Social Security benefit may be subject to federal income tax. “That also means at least 15% remains federally tax-free, so a larger monthly benefit could provide more tax-free income,” Riggs said.
• How much a benefit can grow if you wait. Delaying after full retirement age generally increases benefits by 8% per year until age 70. A larger benefit also means more inflation protection in dollar terms.
• Spouses. The higher earner’s claiming age can affect the benefit that may be available to a surviving spouse later.

Methinks … Boyden suggested people think about when they’ll claim several years before they plan to leave the workforce. “Social Security is one of the most important retirement income decisions many Americans will make,” she said. “It has implications for monthly income throughout retirement.”

Hanging it up ain’t easy.

Retirement is usually thought of as something older workers go through, but it’s also a fact of life for professional athletes no longer at the top of their game. As with workers in more typical fields, pro athletes seldom have complete control over when they’re forced to hang it up, and they can struggle to find a footing while searching for the next step. The only real solution to an early retirement, for elite athletes and otherwise, is to plan ahead and save for the future while the paychecks are still coming in.

Matthew LaPorta, executive-in-residence at Dynasty Financial Partners, has lived these dynamics, having found sporting success as a Major League Baseball player and Olympian. Leaving the game behind in 2014 wasn’t easy, LaPorta told Retirement Upside, but he has since found a great deal of meaning in wealth management.

“When you retire from a sport that you love, it’s like a piece of you dies in the process,” LaPorta said. “You have to ask big questions about what comes next. For pro athletes who made it to major sports leagues like the NFL, NBA or MLB, the hardest part of the athlete-to-investor transition usually isn’t access to capital. It’s recalibrating what performance means.”

Peak Performance

On the field, performance is immediate. It’s delivered under pressure, on a schedule and in front of everyone. Investing and capital allocation for a retired pro runs on the opposite logic.

“Where many athletes get the transition wrong is treating capital as the scoreboard,” LaPorta said. “The real goal is to build a durable portfolio with assets that compound and risks that are understood.”

Retiring athletes are used to finding success by making big plays, but with investing, bigger bets usually aren’t better moves. Instead, LaPorta said, success means building a structure in which accumulated capital does patient, deliberate work long after the playing career end.

“A lot of the work we need to do as an advisor is helping people cut through the noise,” he said. “Successful athletes are constantly being pitched on investment ideas, and they see people posting on social media about big venture capital deals and private investments. You can end up with shiny object syndrome.”

Even for athletes with high base salaries, it pays to be prudent:

• A study published in Population Research and Policy Review found a mean career length of 5.6 years for Major League players.
• Because a small number of superstars play for 15 to 20 years and skew the mathematical mean upward, the median career length is closer to two to three years.

Reinvesting in Sport. Many athletes are drawn to investments that involve sports in some capacity, and LaPorta says they should lean into that. “There’s a ton of opportunity there,” he said. “Sports are a broadening asset ecosystem, with opportunities from professional franchises down to youth sports, athlete brands and infrastructure.”