Q. When should I apply for Social Security, now, at age 62, or, later when I'm 66?

A. This is a question that millions of baby boomers are starting to face: when to start taking Social Security benefits. It's a financial decision that can be complicated.

RESOURCES

The Social Security website, www.socialsecurity.gov, offers several tools, including "When to Start Receiving Retirement Benefits," here.

A calculator will help you understand how much your benefit would be increased by waiting: click here, or search "quick calculator."

Or call, toll free, (800) 772-1213, 7 a.m. to 7 p.m., Monday through Friday.

First of all, you need to figure out at what age you'll qualify for "full retirement benefits." This is assuming you've worked and paid into Social Security for at least the required 40 quarters. Then your actual benefit check will be based on your earnings history.

The old magic age of 65 to qualify for Social Security benefits has been extended for the baby boom generation. Now those born from 1943 through 1954 must wait until age 66 to collect full, or "normal," retirement benefits. Those born later will find the age limit increases by two months every year, so that those born in 1960 or later will have a "full retirement age" of 67.

Second, you'll want an estimate of your benefits at full retirement age. You can get an individual estimate online, based on your work history, by going to

www.socialsecurity.gov/estimator. It will give your current estimated benefits and show you how they would be reduced if you retire "early" or increased if you wait until later. Or you can contact Social Security for a personalized, written estimate.

Taking Benefits Early

You can start taking benefits at age 62 -- but your benefits will be reduced to take into account that you are likely to receive them over a longer period of time. And you should be aware that the amount of your monthly check is also calculated based on an average of 35 years of earnings. So, if you're still working at age 62, and presumably earning more than when you were younger, you might want to have those latest, highest-income years averaged in to your benefit payment.

Also, if you collect benefits before full retirement age and are still earning income, above $14,160 (in 2009), your benefits will be reduced by $1 for every $2 earned, except for the year in which you reach full retirement age, when they will be reduced by $1 for every $3 earned over $37,680 (in 2009). This earnings test is eliminated the month you reach full retirement age.

Still, many people have a reason to apply for early benefits. Perhaps they've lost a job or no longer can work. (People younger than age 65 can apply for Social Security Disability Insurance benefits -- if they're disabled and cannot work.) Or you might take a look at your health, or your family longevity, and conclude that you have a relatively short life expectancy and should start taking benefits early. Continued...