You know you want it. It's so close, you can almost taste it. The question is, if you get it, can you live with the consequences for the rest of your life?
Of course, we're talking about Social Security. You can begin receiving your retirement benefit as early as age 62, or you can wait until your 70s. The earlier you take it, the smaller the check will be -- permanently. So should you take the money as soon as possible, or should you wait for the fatter payout? The answer -- as it is for an adult with bladder problems -- is... depends.
If you're below full retirement age but still working, it probably doesn't make sense for you to start receiving Social Security. That's because your benefit will be reduced $1 for every $2 you earn above an annual limit (which is $11,280 this year, but is increased annually). If you're not working, then it might be worth receiving Social Security sooner (though smaller) rather than later. That depends on several factors, including your...
Full retirement age
This is the last year that 65-year-old Americans will be able to receive full retirement benefits. Henceforth, full retirement age will begin to creep up to 67. By visiting the Social Security website, you can see what your full retirement age will be and how much your benefit would be reduced if you receive benefits early.
Putting it off
Even though you can start receiving benefits at full retirement age, Uncle Sam gives you a reason to put it off. For every year after your full retirement age that you postpone receiving benefits, your eventual check will increase by 6.5%. If you're eligible at age 65 but don't cash in until you're 70, your benefit will be almost a third bigger. Is it worth the wait?
The breakeven age
By visiting this calculator at the Social Security website, you can get an estimate of your benefit. After submitting your numbers, click on the "break-even age" tab to get a calculation of how long you must live to make a delayed benefit worth it. That's what it comes down to: how long you will live, and thus how long you'll receive benefits. For most people, it will take 13 to 15 years to make a later, bigger check pay off.
Unless longevity runs in your family (you can find out by asking your 115-year-old grandmother), you would probably benefit by taking the money as soon as you can.
Want another opinion? See what Fools are saying on the Retirement Investing discussion board.