When to start Social Security? This tool can tell you

If you're approaching retirement, maximizing your Social Security benefits is a critical goal because they'll most likely provide a significant chunk of your retirement income. And one of the primary factors that determines how much you'll get each month is the age at which you start collecting those benefits.

Now, a new tool from financial advisory firm Financial Engines offers an easy-to-use online planner for analyzing the best time to start your Social Security benefits, as well as for your spouse if you're married (If finalized in its present form, a budget agreement reached by congressional leaders and the White House would eliminate certain strategies for claiming benefits.)

The yardstick Financial Engines' planner uses to assess a claiming strategy is the total amount of Social Security income that you're estimated to receive over your lifetime. In this case, size matters -- a claiming strategy that increases your expected lifetime payout represents an improvement.

The calculator asks a few questions about your specific situation, including birth date, salary, gender, marital status and your self-assessed health status. If you're married, you'll input similar information for your spouse.

The system will estimate your Social Security benefit based on this information, but it also gives you the opportunity to get a more accurate estimate of your benefits that reflects your entire salary history (which you can find on the Social Security website).

The tool asks for your initial decision regarding the age you plan to start Social Security, then it estimates the lifetime payout based on this initial strategy. It can then search for other strategies that have the potential to boost your lifetime payout, such as starting benefits at a later date or the best way to claim benefits for your spouse.

If you're married, coordinating the start of your benefits with your spouse's can be a complex challenge. According to Financial Engines, you can face more than 8,000 possible combinations of ways that married couples can file for Social Security.

Fortunately, you don't have to analyze each of these combinations -- that's what computers are for. The Financial Engines system will analyze various claiming ages and estimate the potential gain from commonly advocated strategies for married couples, such as file and suspend and restricted application. Maximizing your Social Security benefit is a good way to take care of your spouse after you're gone.

One important thing to remember: You don't need to start your Social Security benefits as soon as you stop working. Also, you and your spouse don't need to start Social Security benefits at the same time. In fact, you might boost your combined lifetime payout by starting benefits at different times.

If you want to retire before the best age to start your Social Security benefits, you have a few choices. Each month, you can withdraw from your retirement savings the amount you would have received from Social Security had you started these benefits when you retired. Think of these withdrawals as purchasing from the U.S. government a lifetime annuity (which is the increase in your Social Security benefit by delaying).

An even better way to avoid taking your Social Security benefits too soon is to work just enough to replace the Social Security benefits you're delaying and let your retirement savings grow.

Some people think they'll do better by starting Social Security early and investing the benefits they receive. To even have a chance at succeeding with this strategy, you need to achieve investment returns that are possible only by investing significantly in the stock market -- and that entails substantial risk.

Why not give the Financial Engines Social Security Planner a try? It takes less than 30 minutes, and you have the potential to boost your lifetime Social Security payout by $100,000 or more. That's certainly a good use of 30 minutes, and your future retired self will thank you.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.