Social Security: Now or Later?

Many financial planners, as well as Kiplinger, recommend waiting until at least your full retirement age--or, even better, until you're 70--to claim Social Security. You're eligible to file for Social Security as early as age 62, but if you do, your benefits will be permanently reduced by at least 25%. Waiting until full retirement age--66 for most baby boomers--means you'll receive 100% of the benefits you've earned. And if you continue to postpone filing for benefits after you reach full retirement age, your payouts will grow by 8% a year until you reach age 70.

That, combined with cost-of-living adjustments in most years, is a return you're unlikely to get anywhere else. Yet retirees seem to be ignoring those numbers: Nearly 60% of retirees claim benefits before age 66, and about one-third of those retirees claim benefits at 62. Are they misguided or onto something?

Figuring out when to file for Social Security usually comes down to a question that's nearly impossible to answer: How long will you live? Retirees who wait until full retirement age or later will receive fewer checks over their lifetime, but the checks will be for larger