Should You Delay Taking Social Security?

But many people have big incentives to postpone payments as long as possible. If your normal retirement age is 66 and you file a claim at 62, you will only receive 75% of the full benefit.

The amounts involved are significant. Someone who was born in 1950 and earned $75,000 annually would receive a full monthly benefit of $2,412. The monthly check would drop to $1,815 if the retiree started taking benefits at 62. By waiting until 70, the beneficiary can raise the payout by 32% and receive a benefit of $3,183.

Some people in poor health may be inclined to take benefits early. After all, there is little point in waiting if you expect to die in your 60s. People in good health must make a judgment about their life expectancies.

If you start collecting at 70 and die in your early 80s, you would receive about the same total benefits as someone who began collecting at 62. But if you expect to live well into your 80s, then you have good reason to postpone benefits.

Most people should delay taking benefits as long as possible, says Richard Johnson, director of the retirement policy program at the Urban Institute.

Johnson says that retirees should view Social Security as an insurance policy that should be used for protection against hardship. "By waiting to increase monthly payments, you improve your retirement security," he says.