Think You Don't Need Your RMD? 3 Smart Ways to Use That Money Without Wasting It.

Key Points
If you don't need your RMD, you could invest it.
Donating the money to charity could help an important cause while giving you a tax break.
Certain home and lifestyle upgrades could help you age more safely.
- The $23,760 Social Security bonus most retirees completely overlook ›
If you have your retirement savings in a traditional IRA or 401(k), you may be aware that your money can't just sit and grow in a tax-deferred manner forever. Once you turn 73 (or 75, depending on your year of birth), you'll have to start taking required minimum distributions, or RMDs.
RMDs may not be a problem if you're planning to tap your IRA or 401(k) for money each year, and the amount you're required to withdraw is equal to or less than the amount you intended to take out in the first place.
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Put another way, if you're on the hook for a $20,000 RMD but planned to withdraw $2,000 a month from your retirement savings to supplement your Social Security, there's not really an issue. Rather, RMDs become more of a problem when you don't have an obvious need for the money.
But that doesn't mean you should let your RMDs go to waste. Here are three smart things to do with them.
1. Reinvest in a taxable brokerage account
Just because you're required to withdraw money from a retirement account doesn't mean you have to spend it. If you want that money to keep growing, invest it in a taxable account. You can choose investments that lend to your broad financial goals, whether it's income stability, growth, or the ability to leave a nice inheritance.
2. Take advantage of qualified charitable distributions
RMDs are usually a taxable event. But if you use yours to do qualified charitable distributions, or QCDs, they won't have to be.
With a QCD, you can transfer funds directly from an IRA to an eligible charity. That allows you to satisfy your RMD without having that withdrawal add to your taxable income.
3. Make home and lifestyle upgrades that promote personal safety
At a certain age, it may no longer be safe for you to shovel your own snow in the winter or do your own home repairs. And if you want to age in your home, at some point, you may need to make adjustment to accommodate changes to your mobility or vision. That could mean installing bathroom accessories and new lighting as a couple of examples.
Your RMDs could provide the income needed to outsource home maintenance and update your home as needed. The result? A safer environment for you, which could lead to savings on healthcare costs.
RMDs may feel like an inconvenience, but they don't have to be a source of wasted money. The key is to put those mandatory withdrawals to good use so they serve a purpose, whether it's allowing your investments to keep growing, supporting a cause you care about, or helping you age in a safer manner.
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