When Should You Take Social Security?

If there's one ironclad rule of personal finance, it's that there are exceptions to nearly every rule. Take, for example, the conventional wisdom that says one should delay taking Social Security benefits for as long as possible. After all, the longer one waits, the larger the monthly benefit.

Of course, not everyone agrees that waiting is the best idea. For some, the thought of getting the money sooner--as early as age 62--is a no-brainer if they need it for living expenses or want it for some other purpose (such as to invest it). Then, there's the complication of coordinating benefits between spouses, which makes coming up with a one-size-fits-all recommendation about when to claim Social Security virtually impossible.

Last week, we asked readers on our Personal Finance discussion board at what age they started taking Social Security and why. The answers we received offer plenty of evidence as to just how personal the decision is and how priorities vary from person to person. You can read the full discussion by clicking here.

'A Bird in the Hand' About half of all Americans who claim Social Security do so at age 62 or within two months of leaving a job (click here to read more about why). Many of those who responded to our question fall into this group.

In some cases, claiming was simply a matter of getting the money as soon as it was available.

"I started receiving my Social Security just as soon as I could when I retired at 62," wrote ppryor. "It makes me feel great every month I see money being returned to me!"

Dmauch1 also claimed at that age, explaining, "There are many things you can do at 62 that you can't do later on."

Others claimed at 62 for more pressing reasons.

"Had a young family [and] needed the money," wrote tomz62.

Reader 1952god took Social Security at 62 out of financial need but has no regrets. "Now, at age 86, although I would be getting more [by waiting], I don't need it. It was a good decision and I would do it again."

Others said they decided to start taking Social Security on the theory that having the money in-hand trumps a potential higher payout down the road.

BoomerGuy said he started taking benefits at age 66, adding, "I wasn't desperate for the income, but I do believe in that old adage about the bird in the hand!"

Offshoresailor, who, along with his wife, took benefits at age 62, offered a similar take.

"Although I am a retired CPA and can compute that waiting theoretically increases our total potential payout, neither of us need the income," he wrote. "I don't trust the government to pay out future benefits as promised. ... [The possibility of] needs testing, federal taxation, and sheer inability to pay future benefits lead me to follow a 'bird in the hand is worth an entire flock in the tree' theory."

A few readers said they took Social Security early as part of a broader investment strategy.

"Started collecting at 62 and invested the money, all of it," wrote Joet212. "That was 10 years ago. I still haven't touched it. I'm building my own pension with the Social Security and investments. I have my own small business and will retire at the end of the year."

ARandall is using a similar approach and said that, so far, it has worked in his favor.

"I took Social Security at full retirement age and invested my Social Security check," he said. "I figured I could beat the 8% return [for waiting longer] (I'm averaging just under a 10% return) and I trust myself more than I trust the government."

'I Elected to Let My IRA Grow' Several others mentioned taking Social Security early in order to allow more time for their retirement savings to grow.

"Social Security, in conjunction with my military retirement pension, allowed me to leave both my IRA and taxable account untouched until RMD time," wrote ColonelDan.

Cgajowski said he or she claimed benefits at age 67. "Was going to wait 'til 70, but realized that I had a use for the income right then and could avoid tapping IRAs--Traditional and Roth--to handle some home repairs and to allow for better planning on the sale of an inherited property," the commenter said.

For Kalamazookid, estate planning played a role in the decision to start taking benefits early.

"I left the work office at age 57 due to a merger and took a lump-sum pension option," the commenter said. "At age 62 I had two choices: draw Social Security or make withdrawals from my rollover IRA. I elected to let my IRA grow and know my family would have this asset if I were to pass away early."

In the case of Enoui, taking Social Security at age 65 rather than waiting turned out to be a boon to his retirement portfolio.

"This additional income helped me to continue to max out my 401(k) at 15% plus 8% match plus the additional I could invest in a Roth IRA," Enoui wrote. "... Waiting to 70 for Social Security would have meant withdrawing more from my IRA and I felt that with a moderately aggressive investment approach I would come out ahead. I believe I did. So instead of possibly leaving my spouse with a larger Social Security, she instead will inherit a larger IRA. The upside is also obvious if she dies first as my children would not get Social Security but would get the IRA."

'Travel Is a Lot More Fun at 62' In some cases, readers said that taking Social Security when they did was a lifestyle choice as much as anything and described how the extra income helped them afford certain activities, especially travel.

Shelbyta123 wrote, "We took Social Security at age 62, when we retired. The advantage was that the extra money allowed us to do overseas traveling without taking any distributions from our IRAs. Overseas travel is a lot more fun at 62 than it is at 72. That approach was feasible for us because we both have pension income from our jobs, as well as the IRA money."

For doctorWu, deciding to take Social Security at age 62 was, in part, a matter of running the numbers and figuring out whether delaying was worth it.

"I ran my own spreadsheet and looked at the [government] mortality tables," he said. "It's a coin flip, probably less for me, whether I reach the break-even point, but it's a sure thing that I'll be playing more golf and spending more money on travel and entertainment now than at age 81. I took Social Security ... at age 62 and my wife also did the same three years later. We will be 67 and 64 this year."

'The Best Annuity Available' While many commenters explained why they took Social Security before qualifying for the maximum benefit at age 70, others explained why they decided to wait. The biggest reason for most is that benefits increase at a rate of 8% each year a beneficiary waits to claim beyond full retirement age.

Laserguy said he waited until 70 to claim "because my wife is 10 years younger than I am. We're in excellent health and she has a history of longevity in her family. Besides, where else can you get a guaranteed 8% a year for waiting?"

Another reader, atomiccab, intends to wait to max out his benefit partly out of consideration for his wife.

"I reached full retirement age last year and will not collect until 70," he wrote. "Spouse has longevity in her family and I would feel like a cad if I took my benefit earlier as the widow benefit would be significantly lower. ... She has a lot of zeros in her record [from years of not working] as she was a stay-at-home mom. ... I think of Social Security as the best [cost-of-living-allowance] annuity available."

In fact, longevity was a key driver for most of the readers who said they waited until age 70 to take Social Security.

HikerNC gave the following explanation: "First, both my wife and I are healthy and come from hearty stock of long-lived lineage. Therefore, the odds are that at least one of us--and very possibly both--will live to 100, making an inflation-adjusted stream of payments starting at a high level a very valuable asset. Second, Social Security is an asset that nobody can outlive, barring very black, black swan events. Third (and probably first on an emotional basis), because most wives outlive their husbands, I couldn't think of a better financial asset to leave my widow than a government-guaranteed, inflation-adjusted lifetime stream of payments."

While several readers said they waited until 70, for at least one, even that wasn't long enough.

"I would have put it off even longer if the law permitted it," wrote esfield. "I'm still working, and Social Security just adds to my tax burden. For those whose circumstances permit it, waiting has much to recommend it."

'I Might Not See 70' Of course, there's a flip side to the longevity issue as well. Several readers said that family health history was the very reason they took benefits at a relatively early age.

"I took Social Security at 65, just before retirement, mainly because my family's history of longevity isn't that great," said carman. "Mother died at 51 and father at 75 and only one paternal aunt made it past 80. So far (10 years later) I don't regret the decision."

Banker5358 said he or she took Social Security at age 62, adding, "I never expected to live much beyond that age. No one else in my family ever did. I am now 78."

For reader tparker386, family history weighed heavily on the decision to claim early.

"My father died at age 62 of heart issues," the commenter said. "My grandfathers on both sides of my family died at age 65 of heart issues. I have a history of high blood pressure, which is not surprising. My forefathers never saw one dollar of Social Security, though they paid in plenty. I took early Social Security because I might not see age 70. And if I do, I probably will not see 80. I am currently 67."

Readers who have lost spouses described how it factored into their decision-making.

"I began taking my wife's survivor benefits at 66 since there was no penalty and am deferring taking my own till 70 to maximize the monthly payout," wrote Grotzm.

Shirley said, "I just signed up for Social Security as I will be retiring as of April 3. I will be 64 in June. Since I'm considered a 'divorced widow,' I'm starting out at 100% against my late ex-husband's account. I will then take mine at a later date--somewhere between 66 and 70."

For jbhO64, the decision regarding when to take Social Security was based on multiple factors.

"I was dramatically widowed at 56 and took Social Security survivor benefits then when I turned 62," she recalled. "It seemed the right thing to do while I am still active and need the income. The break-even point appeared to be 80 and who knows what will be the situation then."

If there's one lesson to be gleaned from what readers had to say about deciding when to take Social Security, it's that looking at the decision from all angles is crucial. That way you can avoid making a decision you will regret later. It's a lesson reader mabeldodge75 says could have come in handy.

"I began taking Social Security at age 65, but continued to work until 75," the commenter wrote. "Had I not had to sign up for part of Medicare at 65, I might have taken the time to become more knowledgeable about putting off taking Social Security. It was being busy and not having a human resources office that offered employees thorough information. Knowing what I know now, I would have waited."

Some comments have been edited for clarity and brevity.