Many retirees assume claiming Social Security benefits right away makes sense for them. But the reality is that it's not always a good idea to start getting these payments as soon as you leave the workforce.

To decide if filing for Social Security checks is the right choice for you, there are three crucial questions you should ask yourself.  Here's what they are. 

Two adults looking at financial paperwork.

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1. Will claiming shrink your benefits?

If you are thinking about claiming Social Security, you'll first want to understand whether your decision could end up reducing the monthly income you receive.

This is a possibility because you receive your standard monthly Social Security benefit only if you get your first check at an age designated as your full retirement age. FRA is based on when you were born and is between 66 and four months, and 67. If you start payments at exactly that age, you'll get your primary insurance amount (PIA), which is based on average wages over your career. If you wait beyond FRA, your PIA will increase, and if you start earlier, it will shrink. 

You can calculate how your standard benefit will change based on your claiming age by figuring out your FRA and then applying the following penalties or credits to your primary insurance amount:

  • Reduce your payment by five-ninths of 1% for each of the first 36 months you are claiming benefits ahead of your FRA. 
  • Reduce your payment by an additional five-twelfths of 1% per month if you are claiming more than 36 months early.
  • Add two-thirds of 1% to your standard benefit for each month you delay your benefits claim beyond FRA.

If this formula is confusing, you can also log into your online Social Security account where you can find estimates of benefits at different claiming ages. It's important to know that an early claim will permanently shrink benefits so be sure you're OK with this choice before getting benefit checks started.

2. Can you afford to put off your claim?

If you're committed to retiring soon, you should also consider what your budget would look like without Social Security checks coming in. You need to maintain a safe withdrawal rate and not take too much money out of savings too fast, so think about how much income your retirement investments will actually provide.

If it is not enough without Social Security checks, then you may have to claim benefits even if you would prefer not to do so right away. Starting Social Security earlier than planned can be better than draining your nest egg dry and ending up relying on your retirement benefits alone if they simply aren't enough to live on by themselves.

3. Will you be working? 

Finally, you'll want to consider whether you're going to work in retirement or not. If you are, then you need to learn the rules for working while getting Social Security checks

If you work while receiving payments and you are under full retirement age, you could end up temporarily forfeiting some of your benefits once your income exceeds a certain threshold. There's little sense in starting checks only to stop getting them due to high earnings. 

By asking yourself these three questions, you can decide whether moving forward with a Social Security claim makes sense or whether it would be best to put off filing for benefits a little longer. Remember, you can retire without getting Social Security, but should do so only if you can comfortably afford to without draining your savings too fast.