First of all, do you need the money right away? With many people either unemployed or underemployed going into their 60's and work hard to find, some people are almost forced to start taking benefits at the earliest possible instance. You might not get as much as waiting, but half a loaf is better than jack shit. It used to be that you could pay the money back and then get higher benefits later on, unfortunately, they have done away with that tasty morsel.

If you are retired, and have enough in investments to cover your expenses, it still may make sense to take early benefits. Here is where assumptions really come into play. First, you have to assume how long you will live. I know it sounds morbid, but we are all going to die, and thinking about it won't bring the grim reaper to your doorstep. Financial planning sometimes requires us to think about things we don't want to but are necessary. You can use mortality tables from an insurance company or better yet, look at your own family. If your father, grandfather and great grandfather all died of heart attacks before the age of 60, face facts, you better take your benefits while you can. But, if your great great grandmother is still cooking Sunday meals for you every weekend, you might have a bit longer on this earth and thus more time to collect larger benefits and better wait to withdraw.

Another thing you have to ask yourself is, how good are you at investing? If you take your lower benefits and put them in a money market making 1%, you might as well let the government invest for you and wait to collect full benefits. Heck, they can even do better than that. But, if on the other hand you are a savvy investor and have averaged 10% a year for the last 20 years, you might be better off taking the money right away. Here is where you have to run the numbers using time value of money calculations. Basically, you just want to figure out how much money you will have from the government from 62 until the projected end of your life including interest of course, and then figure out how much from 65 till the end of your theoretical life and see which figure is higher. Usually, if you are not a very good investor it is better to wait, if you are a good investor it might make sense to get the money right away.

You also have to think about your spouse as well, because even if you die, he or she may be eligible to get a portion of your benefits, especially if he or she did not work to build up his or her own benefits. Again, here is where some more math needs to come in. If you don't want to think about mortality or simply don't know how to do time value of money calculations, a good CPA or financial adviser would be handy. Often, they can do these calculations as part of your estate planning, or at the same time as your insurance or taxes. With such an important decision, it sure wouldn't hurt to have a second opinion anyway.

Finally, you have to consider what will happen with tax policy. They say social security is the third rail, and no politician will ever touch it. But, with the incredible size of our national debt, who knows what taxes and changes will come even to our beloved social security? Some say the benefit age will have to be raised, and some say benefits will have to be reduced. Again, here is where you just have to use your best judgment. I can't imagine they will change the rules for existing beneficiaries, but I never thought I would see the day when social security benefits could be taxed either. The point being is that you have to decide what, in your best judgment, will happen and act accordingly. If I thought my benefits might be reduced in the future, I would be more inclined to take them right away.

There are a lot of variables to think about when getting ready to take social security benefits. To keep it simple, the main things you have to consider are: 1. Do you need the money right away? 2. How long do you think you will live? 3. How good are you at investing? and 4. How do you think benefits will change in the future? Considering you may be getting benefits for 20 or 30 years, a couple days of planning would go a long way to a good retirement.