I retired at 60 and have an untouched $700k nest egg. Are RMDs going to skyrocket my taxes owed?

Core Insights - The article discusses the importance of planning for long-term care and Required Minimum Distributions (RMDs) for retirees, particularly focusing on a case study of a retiree named Alice [1][3][4]. Long-Term Care - A significant percentage of older adults will require long-term care, with 80% of 65-year-olds expected to need it at some point [1]. - The median annual costs for long-term care in 2023 are reported as follows: $116,800 for a private nursing home room, $75,500 for a home health aide, and $64,200 for an assisted living facility [7]. - Long-term care insurance is suggested as a way to mitigate these costs, with average annual premiums of $1,200 for single males and $1,900 for single females like Alice [8]. Required Minimum Distributions (RMDs) - Alice will need to start taking RMDs from her traditional IRA once she turns 73, which is a requirement to ensure retirement funds are not left untouched indefinitely [3][12]. - Failing to take RMDs can result in a 25% tax penalty on the amount that should have been withdrawn [12]. - Strategies to minimize RMDs include converting traditional IRA funds to a Roth IRA, which is not subject to RMDs, although this requires paying income taxes on the converted amount [15][16]. Financial Planning - The article emphasizes the need for a tailored financial strategy, potentially involving the assistance of a financial advisor to navigate the complexities of RMDs and long-term care planning [15][17]. - It also mentions the back-door Roth IRA method as a long-term planning strategy for high-net-worth individuals, allowing for tax-free growth without RMDs [19][20]. - The importance of understanding tax implications and the potential impact on financial situations is highlighted, as RMDs can affect tax brackets and Medicare premiums [14].