Editor’s note: This is one of the 20 tough financial questions posed in the “Do This or That?” cover story in the September 2011 issue of Kiplinger’s Personal Finance. Use the drop-down menu above to consider other financial conundrums and the right answers for you; share your own experiences and insights in the Discuss field at the bottom of this page.
Claim benefits at age 62 if you are no longer working and need the money, or if you are in poor health. But be aware that your retirement benefits will be reduced by 25% for the rest of your life. And if you continue to work, you’ll lose $1 in benefits for every $2 you earn over a certain amount -- $14,160 in 2011 -- until you turn 66.
Wait until 66, if you can, to collect your full retirement benefits -- waiting until your normal retirement age ensures a bigger check. Plus, it allows married couples to exercise some creative strategies that can boost their income by thousands of dollars a year. For example, if your spouse is already collecting benefits, once you reach 66 you can collect half of what your mate gets without touching your own benefits, allowing them to accrue an additional 8% per year until you reach age 70. That locks in a bigger benefit for you and a bigger survivor benefit for your spouse if you die first.