A 70-Year-Old With $600,000 Delays Social Security for the 8% Bonus, and Walks Into a Bigger RMD

The decision to wait until 70 to claim Social Security is usually framed as a math problem the retiree already won. Every year of delay past full retirement age lifts the benefit by roughly 8%, and that credit is guaranteed by the federal government. What the 8% pitch tends to leave out is what happens on the other side of the ledger. A retiree who defers benefits while leaving a $600,000 traditional IRA untouched banks a larger monthly check and simultaneously compounds a larger required minimum distribution (RMD) that kicks in a few years later.

The 8% Credit, in Context

For each year a worker delays claiming beyond full retirement age, up to age 70, the monthly benefit grows by 8%. Cost-of-living adjustments then compound on that larger base. The 2026 COLA came in at 2.8%, with analysts projecting the 2027 adjustment could reach 3.8%. Against a 10-year Treasury yield that has climbed to roughly 4.7% in mid-2026, an 8% guaranteed uplift with full inflation indexing is genuinely difficult to replicate in a taxable account. That is the core case for waiting, and it holds up on its own terms.

Where the RMD Enters

Under current rules, required minimum distributions from traditional IRAs and 401(k)s begin at age 73 for those born between 1951 and 1959. Under the SECURE 2.0 Act, anyone born in 1960 or later does not face mandatory withdrawals until age 75. A 70-year-old who has just filed for Social Security has at least three years before the first mandatory withdrawal, and possibly five. If the $600,000 balance is left to grow rather than tapped for living expenses during that window, the base against which the RMD is calculated grows with it.

At a 6% annual return, $600,000 becomes roughly $714,600 by age 73. Using the IRS Uniform Lifetime Table divisor of 26.5 for a 73-year-old, the first RMD moves from about $22,600 (on the untouched original balance) to roughly $27,000. That gap widens each subsequent year as the divisor shrinks and the balance continues to earn returns net of the withdrawal. The 8% credit and the growing RMD are outcomes of the same choice: keeping the tax-deferred account intact while the delayed benefit accrued.

The Tax Bracket Collision

The interaction shows up squarely on the tax return. For a single filer in 2026, the standard deduction is $16,100 (raised and made permanent by the One Big Beautiful Bill Act signed in July 2025), the 22% bracket begins above $50,400, and the 24% bracket begins above $105,700. A maximized Social Security benefit combined with a roughly $27,000 RMD can push a retiree who previously sat in the 12% bracket into the 22% bracket, and up to 85% of the Social Security benefit becomes taxable once combined income clears the relevant thresholds.

One offset worth noting: the One Big Beautiful Bill Act also added a temporary $6,000 senior bonus deduction for taxpayers aged 65 and older, available for tax years 2025 through 2028, though it begins to phase out above certain income levels. That extra deduction can cushion the bracket impact for retirees with moderate income, but it does not eliminate it for those whose RMD and Social Security combine to push income well into the 22% range.

The calculator above models the delayed-claim scenario. The RMD is a separate lever that stacks on top of it once a retiree reaches the applicable RMD start age.

What the Household Data Shows

Average annual expenditures for households headed by someone 65 and older were $65,354 in 2024. Per capita disposable personal income reached $68,391 in the first quarter of 2026, while the personal savings rate sat at 3.9%. For a retiree drawing on Social Security plus an RMD, the combined amount often exceeds actual spending needs. The result: part of the mandatory withdrawal gets taxed and then redeposited into a taxable account, adding a layer of friction that the original deferral decision did not anticipate.

What the Trade-off Looks Like

Two variables are being optimized against each other. The 8% delay credit rewards leaving the Social Security claim alone. Spending down the traditional IRA between full retirement age and the RMD start age, or making partial Roth conversions during those years, reduces the base used to calculate RMDs. Doing both at once requires spending from taxable accounts or cash reserves in the interim.

The retiree who waits until 70 without touching the $600,000 gets the higher benefit and the higher RMD. The retiree who taps the IRA in their 60s to fund the delay window arrives at the RMD start age with a smaller balance and a smaller mandatory withdrawal, at the cost of a reduced portfolio buffer along the way. Both paths produce the same 8% credit. They produce meaningfully different tax bills.

Editor’s note: This article was updated to reflect the 10-year Treasury yield rising to approximately 4.7% in mid-2026 (from the earlier figure of 4.54%), the SECURE 2.0 birth-year rules distinguishing a RMD start age of 73 for those born 1951 to 1959 from age 75 for those born 1960 or later, and the One Big Beautiful Bill Act’s $6,000 senior bonus deduction and its effect on the tax bracket analysis.

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