Make Social Security Part of the Retirement Plan

In fact, if you were born in 1960 or later, you must wait to collect benefits until you turn 67 in order to receive 100% of your retirement benefits. For every year you delay receiving benefits, you'll get an additional 8% added to your monthly check (up to age 70, after which there are no benefits for further delays).

Consider your financial situation in retirement as well as your general health when deciding when to start taking benefits. If you need the money to make ends meet, then receiving your benefits early may make the most sense.

You should also consider receiving the benefits early if you are in poor health or have a family history of lower life expectancy. Delaying your benefits in order to receive higher payments makes sense only if you live past your break-even age. (The SSA has its own break-even calculator).

Also, consider the tax implications of receiving Social Security payments. If you have other sources of income in retirement (e.g., a pension or IRA distributions), you'll probably have to pay at least some taxes on your benefits.

Your benefits are taxable (at whatever income tax bracket you fall under) when half of your Social Security benefit plus all of your other income exceeds the base personal limit -- $25,000 if you're single, and $32,000 if you're married filing jointly.

You can calculate just how much of your benefits are taxable by using the IRS online worksheet. If your total income is above $34,000 if you're single ($44,000 if you're married filing jointly), you'll be liable for taxes on 85% of your benefits -- the top rate.

Once you have a clear picture of the impact Social Security benefits will have on your finances, you can decide to start receiving them at the time that works best for you.