When should you apply for Social Security?

Retirement planning is complicated, beginning with the decision about when to begin taking your Social Security benefits. On one hand, if you need the money and don't expect to live into your 80s, it is tempting to take Social Security as early as possible -- at age 62 -- to benefit from the income stream. On the other hand, you can increase your monthly payment considerably by waiting until age 70. Most people underestimate how long they are going to live.

"I like to frame the Social Security benefits issue discussion with my clients by offering a definition of it as an inflation-protected joint and survivor annuity backed by the U.S. government," says Tim Kober, a Certified Financial Planner with Cedar Financial Advisors in Portland, Ore.

"This provides context for the 'when to claim' question," he says. "The present value of Social Security payments is equal over your expected lifetime, regardless of when you claim it. If, as Clint Eastwood would say, 'You're feeling lucky,' claiming late makes sense."