3 reasons you might want to wait to file for Social Security and avoid early retirement

Social Security is a key income source for seniors, and if you want to make the most of it in retirement, you'll need to be strategic about when you file.

You're entitled to your full monthly benefit – meaning, the amount you're eligible for based on your earnings record – once you reach full retirement age. That age is either 66, 67, or somewhere in between, depending on when you were born. But you don't have to file for benefits at full retirement age. You're actually allowed to claim them as early as age 62, and you can wait all the way until age 70 as well.

The latter move is hardly a popular choice, with only 3 percent of recipients filing for Social Security at 70. But it's a decision that can really pay off. For each year you delay your benefits past full retirement age, you'll boost them by 8 percent. This means that if you're entitled to $1,600 a month at a full retirement age of 67 based on your earnings record, you'll increase each payment you collect to $1,984 – for life.

Therefore, if you're thinking of claiming benefits before reaching age 70, here are three good reasons to hold off.

1. You're low on retirement savings

Social Security isn't designed to sustain retirees in the absence of other income. Generally, those benefits will replace about 40 percent of your pre-retirement income if you were an average earner.

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