(Article from Transamerica - Worth a Look - Fall 2008)

One key decision to make as you approach retirement age is figuring out when to begin
taking your monthly Social Security retirement benefits. Although many people are eager to begin
collecting their benefits, there’s a trade-off. You can take benefits as early as age 62, but they’ll be
reduced; alternatively, you can delay taking benefits as late as age 70, and you’ll receive a credit for waiting. The decision is very much an individual one. What works best
for you may not suit someone else.

The so-called normal retirement age—at which you receive full Social Security benefits—is now 65 years and 10 months. In 2009, it rises to age 66. After a dozen years at that level, it will then gradually rise to age 67 by 2027.See the table for benefit reductions or increases for early
or delayed retirement. To find out more, go to http://www.socialsecurity.gov/retire2/retirechart.htm or http://www.ssa.gov/pubs/10147.html.

Here are the pros and cons of taking your benefits early or late.

Early Benefits
Pros: You start collecting your benefits sooner.
Cons: You’ll receive reduced benefits each month for the rest of your life.

Late Benefits
Pros: Larger monthly benefits throughout your retirement.
Cons: You'll need to wait. And if you die within a few years of retiring, you'll have received fewer total Social Security benefits.

Key questions to consider:
How long do you expect to live? The longer your life expectancy, the more worthwhile it could
be to wait in order to collect larger monthly benefits for the rest of your life.

Do members of your family tend to live long? Are you in good health? Can you afford to delay your benefits?
Although it may sound good in theory to wait, if you can’t afford to wait, perhaps you have no choice but to take your benefits sooner. Are you still working? Between age 62 and your full retirement age, there are annual earnings limits before Social Security benefits are reduced. That might dissuade you from tapping into benefits now.

What if Social Security benefits have to be cut back? The latest projection by the Social Security Board of Trustees is that by the year 2041, the Social Security Administration will only be able to pay 78% of scheduled benefits.This would affect all Social Security benefits across the board. It may not figure into your decision, but it’s important to be aware of when planning your retirement.