MANILA — The money the government forces you to take out of retirement accounts doesn’t come with instructions. For Robert, the caller on Clark Howard’s show, the problem wasn’t getting the cash. It was what to do with it after.
He was past 70.5. He had three accounts, roughly $500,000 total.
The IRS said withdraw. He didn’t need a peso of it for daily expenses. That gap — between what the law demands and what a retiree actually requires — is the real story here.
It’s a gap that widens every year for savers who didn’t spend everything they saved. The broadcast aired February 7, 2018.
The problem hasn’t changed. For retirees across Asia, especially overseas Filipino workers and their families, the mechanics are identical. You save for decades.
You send money home. You build accounts in dollars or pesos. Then the calendar flips past 70.5, and the government tells you to start pulling money out, whether you need it or not.
Howard’s answer was direct. Don’t need it?
Don’t give it to family or charity? Put it in an investment account. Buy a total stock market index fund.
Let it sit as an inheritance asset for someone down the road. The logic is cold and practical.
Money that isn’t spent should work. It should grow. It should not rot in a checking account while inflation eats its value.
But the advice lands in a specific reality. For many retirees in the Philippines, checking accounts pay near-zero interest. Inflation runs higher than in the United States.
A peso left idle is a peso that buys less next year. Howard’s instinct — reinvest rather than park — matters more here than in a low-inflation economy.
The distinction is not academic. It is the difference between preserving purchasing power and watching it slip away. The consequences ripple further.
Robert’s question was about three accounts, but the principle applies to anyone with multiple retirement pots. Each account requires its own RMD calculation.
Each withdrawal is a taxable event. Each dollar or peso pulled out is money that could have stayed invested, compounding, for years. The forced withdrawal interrupts growth.
That is the cost of the rule. For families across the region, remittances and retirement savings often cross borders. An OFW in Dubai might have a retirement account in Manila, another in the UAE, a third in the United States.
When the RMD clock starts, the paperwork multiplies. The tax implications cross jurisdictions.
The money moves whether you want it to or not. What happens next depends on discipline. Howard’s advice is a template.
Take the forced distribution. Reinvest it in a broad market fund.
Treat it as a transfer from one account to another, not as income. The goal is to keep the money growing, even if the government insists on moving it. The alternative — spending it because it’s there, or letting it sit idle — is the trap.
The trap is human. The solution is mechanical. Robert’s problem is not unique.
It is the problem of every retiree who saved too well. The government assumes you need the money.
It writes rules for the majority who do. The minority who don’t are left to figure out the rest. Howard gave them a map.
The rest is execution.
