Most people claim Social Security benefits as soon as they are eligible.
Among women applying for Social Security in 2004, over 70% were under age 65, while almost 67% of men took benefits early. Ask retireees why they rushed to claim Social Security, some say it's the only way they could afford to retire or that delaying wasn't worthwhile, because their life expectancy is poor. Others reckon they will fare better by claiming benefits early and investing the money or they figure they should get a few bucks out of the system before it collapses.
Let's say you were born between 1943 and 1954. If you are eligible for $750 a month from Social Security at age 62, you could boost that to $1,000 by delaying benefits until age 66 and $1,320 by postponing until age 70. These figures ignore Social Security's annual inflation adjustment.
How long would you have to live to make delaying benefits worthwhile?
If you were born between 1943 and 1954 and thus get an extra 33% for delaying until 66, the breakeven would fall at age 82. As it happens, a 65-year-old man can now expect to live until age 82, on average, while a 65-year-old woman can expect to live until almost age 85.
The big risk is that you will live a long time and run through your retirement savings. If that happens, getting a fat monthly check from Uncle Sam, because you delayed benefits, could be your financial salvation.