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 locks in a larger monthly check and simultaneously compounds a larger required minimum distribution (RMD) that the IRS will eventually force into play.

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%, and the SSA officially announced a 3.6% adjustment for 2027 on October 14, 2026, the largest increase since 2023. With the 10-year Treasury yield holding above 5% in October 2026, an 8% guaranteed uplift with full inflation indexing remains 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 right along 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 rises from about $22,600 on the original untouched 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 two outcomes of the same single 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 July 4, 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. Once combined income clears the relevant thresholds, up to 85% of the Social Security benefit becomes taxable.

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. The full deduction is available to single filers with modified adjusted gross income up to $75,000, after which it phases out. That extra deduction can cushion the bracket impact for retirees with moderate income. For those whose RMD and Social Security push income well into the 22% range, however, the $6,000 deduction narrows the gap without closing it.

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 aged 65 to 74 were $65,354 in 2024, according to Bureau of Labor Statistics consumer expenditure data. The personal savings rate stood at 4.1% in August 2026, per BEA figures, down sharply from 4.6% a year earlier. For a retiree drawing on Social Security plus an RMD, the combined cash flow often exceeds actual spending needs. That means part of the mandatory withdrawal gets taxed and then redeposited into a taxable account, a friction cost the original deferral decision rarely anticipates.

What the Trade-off Looks Like

Two variables pull in opposite directions. 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 collects 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 SSA’s officially confirmed 2027 COLA of 3.6%, announced October 14, 2026; the 10-year Treasury yield holding above 5% in October 2026; the personal savings rate revised to 4.1% in August 2026 per BEA; and the addition of the $75,000 MAGI phase-out threshold for the senior bonus deduction.

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