If You Delay Taking Benefits, Does It Make a Difference?

Imagine three Average Joes (and/or Janes), all of whom have exactly the same Social Security entitlements. One starts claiming retirement benefits at 62 years of age. The second, who waits until he/she is 66, will receive a full one-third more than the first. And the third, who only claims it at 70, will receive virtually a third more than the second. In other words, someone who retires at 70 receives 76 percent more every year than someone who retires at 62.

You can estimate the Social Security benefits that you personally will receive on the agency's Web site.

Does It Matter Whether I'm a Woman or a Man?

Yes. At 62, the average man in the US can expect to live for another 18.91 years. The average woman is likely to live for another 21.88 years.

That means that single women are usually better off waiting as long as possible before claiming, because they'll receive higher rate entitlements for longer. Single men may wish to start to claim a little earlier.

Married or Single?

Given normal life expectancies, it is generally better for the higher earner in a married couple to delay taking benefits because the surviving spouse will receive the higher rate whoever dies first.

According to Boston College's Center for Retirement Research, the average married couple optimizes their benefits when the wife starts claiming aged 62, and the husband aged 66. That's because men are more often the higher earner.

What About My Health?

Differences in life expectancy between the sexes are smaller than those resulting from many medical conditions, and lifestyle choices. So those of either sex who smoke, are obese, don't exercise, and have a compulsive drug habit should apply as soon as possible. As should those who have been diagnosed with a medical condition that is likely to reduce their life expectancy significantly.

How About Taxes?

Until you reach your full retirement age (65-67 years, depending on when you were born) the government may 'tax' your social security benefits if you work and receive benefits at the same time. You're allowed to earn (in 2009) $14,160 before your benefits are affected, but on everything after that you'll lose $1 in benefits payments for every $2 you earn.

Suppose I Can't Afford to Wait?

If you'd like to delay claiming social security, but think you can't afford to, why not consider a reverse mortgage? This will free up some of the equity in your home, providing you with a lump sum or an annuity that could allow you to wait. And you don't have to make any repayments on a reverse mortgage. It's repaid from the proceeds of the sale of your property, either when you choose to sell, or when you die (or when your spouse dies, if he or she survives you).