5 Questions to Ask Before You Start Claiming Your Social Security Benefits

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According to a 2016 poll conducted by Gallup, 59 percent of retirees rely on Social Security payments as a major source of income. Odds are that you, too, will need Social Security benefits to cover at least some of your living expenses after you retire. Because of this, you'll want these benefits to be as large as possible when retirement actually arrives.

Here are five key questions to ask before you start taking your Social Security benefits.

1. Are you willing to take a smaller monthly benefit for the rest of your life?

Taking Social Security benefits before your full retirement age will cost you in the form of a lower monthly payout. This payout will remain at this lower level for the rest of your life.

You can determine how much of a hit you'll take claiming benefits early by visiting the Social Security Administration's retirement planner site. As the site shows, if you start taking your Social Security payments before you hit your full retirement age, your monthly benefit will be lower.

How much lower? If your full retirement age is 67 and you start taking your benefits at 62, your monthly Social Security payment will be reduced by about 30 percent. If you start taking them at 64, they'll be lower by about 20 percent. Even if you start taking them one year earlier at 66, they'll still be lower — by about 6.7 percent a month. And remember, this is for the rest of your life.

As you can see, claiming benefits early can significantly reduce the amount of money you receive each month. Let's say you are slated to receive $1,000 a month in Social Security benefits and your full retirement age is 67. If you started taking your benefits at age 62 — the earliest you can take them — your monthly benefit would fall to $700.

2. Can you continue working?

While retiring early reduces your monthly Social Security benefits, working past your full retirement age actually increases them.

The Social Security Administration says that if you delay receiving your Social Security benefits until you hit 70, your monthly payment will be 32 percent higher than if you had retired at full retirement age.

Say your full retirement age is 66, and you'd receive $1,000 from Social Security every month starting at that age. If you wait to start claiming your benefits until you turn 70, your monthly payment would rise significantly to $1,320. You'd just have to determine whether you could hold off on receiving those payments until your 70th birthday.

3. How much have you saved for retirement?

Most people can't survive on Social Security benefits alone during their retirement years. Instead, they rely on a mix of savings from different sources — everything from 401(k) plans, to IRAs, to annuities.

How much you've saved for retirement will play a key role in how early you should take your Social Security benefits. If you've saved a significant amount of money for retirement, you might not need as large a monthly Social Security payment to meet your retirement goals. But if you haven't saved much, you might need that larger benefit payment. At the same time, working for a few extra years might help you boost your retirement nest egg, at least by a bit.

4. How healthy are you?

While there are financial upsides to waiting to claim your Social Security benefits, there are also times when this doesn't make sense. Often, this depends on your health.

If you're not healthy, you might need to retire early for your physical wellbeing. And while it's impossible to predict how long you'll live after retiring, if you're suffering from health problems, your post-retirement life might not last as long. Retiring as early as possible, and claiming those Social Security benefits earlier, might then be the best choice. (See also: 3 Reasons to Claim Social Security Before Your Retirement Age)

5. What kind of retirement do you want?

How do you plan to spend your retirement years? Are you looking forward to quiet days spent with your grandchildren, reading books, and pursuing a hobby? Or do you want to travel the world?

If you're looking for a lower-key, less-costly retirement, taking your benefits early — and receiving smaller Social Security payments — might make sense. But if you want a busier, more extravagant retirement, holding off until full retirement age, or later, might be the smarter choice.