QUESTION:

I hope to retire in a year or two. What advantages are there to delaying getting my Social Security payments until I'm 70, if I work until 67 or 70? I'm now 65.

ANSWER:

The Social Security system entitles you to an increased amount in benefits for each year you wait to claim them -- up until age 70. If you retire at any time between age 62 and your full retirement age (65, 66, or 67, depending on your year of birth), your benefits are permanently reduced a fraction of a percent for each month before your full retirement age.

You can get a graphic depiction of this directly from the horse's mouth: the Social Security Administration. Contact the SSA at 800-772-1213 or go to its website at www.socialsecurity.gov to request your Social Security Statement. The SSA will send you its complete record of your lifetime earnings -- along with an estimate of the monthly benefits you will receive at various retirement ages.

Even though you'll receive more money per month the longer you wait to claim your Social Security benefits, it's not always better to hold out until your full retirement age. For example, you may want to claim benefits earlier if you need money to cover your basic living expenses, or if you have a medical condition that makes it likely that you won't live past age 75.

You can use a calculator at the Social Security website to see which retirement age makes more financial sense for you. Go to http://ssa.gov/planners/calculators.htm and enter your current earnings information without a planned retirement date. The calculator will give you your benefit estimates for three different retirement ages, just like your Social Security Statement. But unlike your statement, if you click on "break-even age," the calculator will tell you how long you must live to make delaying benefits worthwhile.

For instance, if you could collect $900 per month when you turn 62, but you would get $1,700 per month if you wait until age 70, the calculator will tell you you'll have to live at least until age 80 1/2 to break even. That means that if you live beyond age 80 1/2, you'll receive more total benefits by delaying your retirement to age 70. But if you were to die before age 80, you would have been better off collecting your benefits earlier. Now we just need a calculator to tell us how long we'll live (but would we really want to look?).