It may be the most pervasive question of retirement planning: When should I begin taking Social Security?

If you start collecting at the earliest opportunity — age 62 — you’ll receive a permanently reduced benefit.

If you wait until your full retirement age, you can collect 100 percent of your benefit. You may lock into an even higher monthly check by delaying Social Security longer still — until age 70.

Determining which option is right for you depends on a number of variables, including your life expectancy, financial picture and — according to economists at the Center for Retirement Research — gender and marital status.

Early Social Security can cost you

If your full retirement age is 67, you’ll get a reduction of:

  • About 30 percent if you start collecting at 62
  • About 25 percent if you start collecting at 63
  • About 20 percent if you start collecting at 64
  • About 13.3 percent if you start collecting at 65
  • About 6.7 percent if you start collecting at 66

Source: Social Security Administration

Put it off

Generally, financial advisers say it’s best to postpone Social Security benefits as long as possible, at least until your full retirement age as determined by the Social Security Administration, or SSA.

Today, that ranges between ages 66 and 67. Those born in 1938 or later see full retirement age gradually climb to 67.

“Social Security is like longevity insurance,” says Brent Neiser, a certified financial planner and senior director at the National Endowment for Financial Education. “It’s a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.”

In fact, he notes, those who undersaved for retirement should use whatever means possible to postpone their Social Security benefits until after their full retirement age to help boost future income.

If your full retirement age is 66, for example, you’ll receive 108 percent of your monthly benefit by delaying Social Security until age 67.

If you wait until age 70, it jumps to 132 percent.

“You can use personal savings to help bridge the gap, but ideally you should plan to work a little longer (and delay Social Security),” says Neiser. “Not only does that save you money — since you’re not drawing money down from your retirement accounts — but you’re potentially adding more to it. Plus, you’ll collect larger Social Security benefits (down the road.)”

Another benefit of working longer? Medicare.

Aging Americans become eligible for federal health insurance coverage at age 65. In the meantime, they can get insurance through Obamacare, as the Affordable Care Act is often called, but premiums may be pricey.

“If you stop working at age 62 and lose health insurance (from your employer), you have to get supplemental insurance to bridge the gap until you turn 65 and Medicare kicks in,” says Neiser.

Paying for such insurance can quickly deplete your savings.

Do you plan to work during retirement? If so, you have another incentive to delay collecting Social Security. Earning too much at a job after you begin collecting Social Security can negatively affect your benefit.

If you are under full retirement age for the entire year, the government deducts $1 from your benefit payment for every $2 you earn above the annual limit. For 2014, that limit is $15,480.

In the year you reach full retirement age, your benefit is reduced by $1 for every $3 you earn above $41,400 (in 2014) until the month you reach full retirement age.

You will also owe Social Security and Medicare tax on your earnings, even if you are already receiving benefits.

Early benefits can pay off

Although it’s often wise to postpone Social Security until at least retirement age, there are instances where taking early benefits pays off despite the reduced monthly check, says Neiser.

“No one can predict how long you’ll live, but if you’re facing a potentially significant reduction in life expectancy and are short of income, taking Social Security early may be appropriate,” he says.

Just be sure you budget for a reduced benefit.

If your full retirement age is 67 and you begin collecting Social Security at age 62, for example, your benefits are reduced by about 30 percent.

The reduction drops to 25 percent if you wait until you’re 63, and so on.

The Social Security Administration provides a chart of retirement benefits by birth year.

Married women are also good candidates for claiming early benefits, according to a study by economists at the Center for Retirement Research at Boston College.

That’s because they are likely to outlive their husbands, and such women then become eligible to receive the greater of either their benefit or their late husband’s benefit.

However, this scenario is only valid if the husband does not claim his benefits early, the authors point out. By not claiming early benefits, the husband effectively increases the monthly benefit his wife eventually receives upon his death.

What’s your break-even?

To better determine when you should start drawing Social Security, it may help to calculate your break-even age.

Your break-even age occurs when the total value of higher benefits (from postponing retirement) starts to exceed the total value of lower benefits (from choosing early retirement.)

Confused?

Here’s an example: If you are eligible to collect a reduced $900 benefit at age 62 plus 1 month, and your benefit would increase to $1,251 at age 65 and 10 months, your estimated break-even age is 75 years and 5 months.

If you expect to live beyond that age, it would be financially worth your while to delay your retirement.

When it comes to calculating a start date for Social Security benefits, however, there’s no one right age that’s appropriate for everyone.

Consider your own financial need, health and post-retirement plans before making the call.

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