Should I Wait to Take Social Security?

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Your benefits grow every month that you wait to claim Social Security. To many people, that sounds like motivation enough to hold off on Social Security -- who wouldn't want heftier payouts?

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But it's not quite as simple as that. A growing body of research has shown that retirees are one of the happiest groups of people around. Once basic material necessities are met, retirees enjoy a sudden and sustainable boost in overall life satisfaction -- no matter their relative levels of wealth.

Because of this, I'm of the belief that the majority of Americans would be best off -- from a life satisfaction point of view -- by taking Social Security as soon as possible. Having said that, there are as many variables at play as there are retirees.

While this is far from a one-size-fits-all solution, I've tried to zero in on the three most important questions to help you determine if you should wait to claim Social Security benefits.

1. If you claimed benefits right now, could you meet your basic needs?

If you answered no...

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If you won't be able to cover your basic needs -- food, housing, utilities, transportation, and healthcare -- then you would likely be better off waiting to claim Social Security.

Right now, the average Social Security monthly benefit is $1,369. Using that as a proxy for the average payout at age 62 -- which is the most popular age for claiming benefits -- here's how the payouts would increase over time, assuming you were born before 1955.

If you're in a pinch, the extra $12,500 that comes with waiting until age 70 can be a huge difference. Not only that, but you can try to reduce expenses while you're working those extra years and invest that difference to give your nest egg further cushioning.

If you answered yes...

Then move onto the next question.

2. Will your spouse's financial needs be met after you pass away?

If you answered no...

There is a slew of confusing rules about how spousal Social Security benefits work when both partners are alive. We're not going to deal with them in this article, but you can read further on the topic here.

No matter what, if both partners are receiving benefits, once one partner passes away, total family Social Security benefits will fall. The remaining spouse will typically keep the higher of the two benefits -- either what he/she was previously receiving or the benefits of the deceased.

If you were the higher-earning spouse, waiting to claim Social Security will increase the funds available to your spouse after you've passed.

And if you are the lower-earning spouse, the two of you should consider whether or not it's wise for you to file for benefits early. If you wait, not only could your payouts increase, but you'll also be able to work and put more money away to ensure financial security when your household is down to one member.

If you answered yes...

Once again, move on to the next question.

3. Do you hate your job and/or feel like your needs outside of work aren't met?

If you answered no...

Congratulations! It sounds like you've found a great fit professionally and struck a healthy balance in the larger spheres of life.

If you continue to work until you no longer wake up in the morning feeling excited for the day ahead, you'll be socking away larger and larger Social Security benefits every year. By the time you reach 70, those benefits will max out.

You can have your pick of purposes for that extra cash: helping younger generations immediately or via inheritance, donating the extra money to charity, or splurging on luxuries you normally eschewed during your working years.

If you answered yes...

Then it's time to start claiming benefits. Of course, this assumes that you answered affirmatively to the two previous questions. After reading retirement studies over the past five years, I'm convinced that the benefits to one's well-being that retirement provides far outweigh the costs of lower Social Security benefit amounts.

I am painting with a very broad brush, but the underpinnings of these questions are a great starting point for deciding whether you should wait to claim Social Security: If you'll feel an undesirable pinch now or down the line, or if you really enjoy what your life looks like right now, it's probably worth waiting.

Otherwise, start enjoying the benefits of freedom of time as soon as possible. It's one of the few commodities you'll never get more of.

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