At 67, He Sees 10-Year Treasury Yields Near 5% and Considers Living on Savings. Waiting Three Years for Social Security Would Raise His Monthly Check 24% for Life

Consider a 67-year-old we’ll call Tom. He has just reached full retirement age (FRA) and could start Social Security tomorrow. Instead, he’s reading bond headlines. The 10-year Treasury yield raced back toward 5% after the latest inflation report and closed at 4.98% on November 10. Tom is wondering whether rates like that make it easy to live on savings for three more years and claim at 70.

Many people reach this crossroads. One 65-year-old caller to a money advice show was working and collecting benefits he didn’t need. He asked how to invest the checks. The host told him to look at delaying instead, because each year of waiting increases the benefit by “something close to 8%.”

A Raise That Lasts for Life

Let’s say Tom’s full retirement benefit at 67 is $3,000 a month. Each year he waits past FRA adds an 8% delayed retirement credit, and the credits stop at 70. After three years, his check would be about $3,720 before cost-of-living adjustments (COLAs).

That works out to $720 more every month, or $8,640 more a year, for as long as he lives. He never has to reinvest it, and it can’t be called away.

The raise also rises with inflation. Each annual inflation adjustment is a percentage of his base benefit, so a bigger base gets bigger raises. The adjustment announced for 2027 is 3.6%, and the 2022 adjustment was 8.7%. A bond coupon remains the same no matter what happens to prices.

Price Tag: $108,000 in Skipped Checks

Waiting has a real cost. If Tom claimed at 67, he would collect $3,000 a month for 36 months, or $108,000 before COLAs. He gives that money up by waiting.

At $720 extra a month, it takes 150 months after 70 to earn that $108,000 back in simple totals. That puts his break-even point near age 82½, leaving out taxes, COLAs and what the money might have earned elsewhere. If he lives past that age, waiting comes out ahead in simple benefit totals, and the gap keeps growing every month after that.

Why a 5% Yield Can’t Replace a 24% Raise

It’s tempting to compare 5% with 24%, but the two numbers measure different things because the 24% is a one-time, permanent increase in the income he’ll get for life. A Treasury yield is the interest the government pays on a loan, and the quoted rate applies only to that specific maturity.

Maturity matters for Tom because he’ll need cash steadily over three years. On November 10, Treasury bills maturing in one to six months paid between 4.05% and 4.38%, and the 3-year note paid 4.74%. If he has to sell a 10-year note early, he gets whatever price the market offers that day. That price falls when rates rise. A typical bank pays less still: the national average 12-month CD yields 1.76%.

The bigger issue is that Tom probably won’t be living on interest alone. Producing $3,000 a month purely from a 5% yield would take about $720,000. Most people in his position spend down their savings during these years. A high yield can make that bridge easier to fund, but it isn’t the main reason to wait.

Taxes and a Spouse Can Tip the Scales

Treasury interest is subject to federal income tax. Once Tom claims, that interest also counts toward the test that determines how much of his Social Security is taxed. Up to 85% of benefits can be subject to federal income tax once half his benefits plus his other income exceeds $34,000 for a single filer or $44,000 for a married couple filing jointly. Before claiming, Tom may have room to draw from his IRA or convert some savings to a Roth at lower tax rates. That shrinks the required withdrawals that would otherwise pile up later.

If Tom is married, his wife may gain the most from his waiting, since when the higher earner dies, the surviving spouse generally keeps the larger of the two checks. By waiting until 70, Tom can secure a bigger benefit for whichever of them lives longer. That moves the real break-even point past his own lifetime.

Where to Focus Before Deciding

First, make sure his savings can cover three years of spending without forcing him to sell investments in a bad market. If the bridge would leave his emergency fund thin, claiming somewhere between 67 and 70 makes sense. He can start benefits in any month, not just at 67 or 70.

Second, starting benefits is a decision that is harder to reverse. Tom can suspend his checks after FRA to earn delayed credits, but he gives up payments while they’re held back. Waiting until 70 avoids that interruption and can also increase his wife’s future survivor benefit.

A high bond yield helps frame the decision. But what Tom needs is income he can count on for life. His health, his marriage and his tax situation will matter far more than any single day’s interest rate. Running his own numbers in his Social Security account before he files could change the answer for him.

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