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When to Take Social Security?

Written by Bob Morrison.

The age at which Americans can tap their full Social Security benefit is rising—and when it will stop rising is anybody's guess.

That's why it's more important than ever to make smart decisions about when and how to start tapping your benefits. Doing so can help you wind up with thousands of dollars more over your lifetime.

The "full retirement age" is 66 today, which is up from 65 about a decade ago. And the government continues to turn the screws" Full retirement age is scheduled to increase by two months a year starting in 2017 until it reaches 67 in 2022. And with the Social Security system straining to meet its obligations, there are already calls to raise the age to 70.

Yet Americans can still dip into their benefits as early as age 62, although doing so will cost you at least 25% of your full-benefit total. This flexibility—along with the ability to take Social Security benefits under your spouse's name—allows you to maneuver toward maximizing your lifetime benefits.

Every situation is different based on retiree's ages, assets and other factors. It often pays to wait until full retirement age before tapping Social Security.

One situation in which that makes sense is when both spouses work and earn high incomes.

Other couples can maximize their benefits using other strategies. Let's say a husband is entitled to a higher retirement benefit than his wife. It may well make sense for him to wait until full retirement age—or even longer, which can increase his benefit level. Yet his non-working spouse is eligible as early as age 62 to start drawing an income stream under the husband's name. She can then tap her own benefits when she reaches the optimal age.

Remember that once you start drawing on either spouse's benefits, you will never be able to draw a higher benefit level than the one you start with. So before deciding on your strategy, it's wise to sit down with a professional who can lay out your options.