It may seem like common knowledge that delaying the claiming of Social Security retirement benefits is an excellent strategy for many families. The financial planning profession may understand this, but it is certainly not true for the general public.

The Social Security Administration’s Annual Statistical Supplement 2013 reveals that the most popular age to start retirement benefits is still 62, the earliest age one is eligible to receive retirement benefits. According to the SSA, 37.5 percent of men and 42.4 percent of women claimed at age 62. These numbers are down from approximately 50 percent ten years ago.

However, it does not appear that people are waiting until age 70 when benefits are maximized. The claiming rate at age 70 has remained fairly steady in the low single-digit percentage range. Rather, the decrease in early filing appears attributable to an increase in the number of people that wait until their full retirement age (FRA) with 31.5 percent of men and 25.2 percent of women waiting until then to claim.

The benefits of waiting are well documented. The longer you wait, the more you get per month. For someone who's FRA is 66, the benefit claimed at age 70 is a substantial 76 percent more than the benefit available at age 62, before any inflation adjustments.

In terms of an "investment return" Professor Wade Pfau estimates that the real – not nominal -- return for waiting is 3.2 percent by age 84, the average life expectancy of a retiring 62 year old male. At 86, the average life expectancy of a woman, the number jumps to 4 percent, real. By age 90, the real return for delaying Social Security is 5.2 percent. In any interest-rate environment, those are excellent results from something that is not affected by financial market risks.

The primary risk involved with delaying Social Security is longevity. Delaying and dying early can result in a substantial or total loss. However, people who expect longevity are wise to consider delaying. This is particularly true of couples.

It doesn't matter who dies first. The survivor of a married couple receives the larger retirement benefit of the respective spouses, making the lifespan bet one placed on a joint life expectancy. With the break-even age typically 81, the odds of a payoff from a delaying strategy are pretty good. One online estimator puts the odds that a male age 62 survives to age 82 at 55 percent. A woman's odds are 65 percent and the odds that either spouse will make it that long, is a substantial 84 percent.

Still, many people are claiming early. The most common cause is simply that people need the money. A significant percentage of the U.S. population gets by paycheck to paycheck. An infusion of cash from Social Security is hard to put off.

Another significant reason for early claims is simple ignorance. While we financial planners talk about claiming strategies often, many Americans don't know what they don't know or find Social Security system too complex to understand.

Many people are passing on delaying for better, even rational reasons. The benefits of delaying are only received if someone lives long enough past the break-even age. If one does not live that long, or lives for a very short period of time past that age, they don't get much of a payoff from delaying.

While one reason delaying strategies look so attractive is that many people believe actual life expectancies are longer than the tables Social Security uses, death is still a fact of life. Current health, family history and other factors can lead one to believe that living into their mid-80s or beyond is unlikely.

Another common negative reaction to the concept of delaying a claim for Social Security benefits stems from the belief that Social Security will not be around to pay later. This is not surprising, given how many people simply don't understand how Social Security works.

As members of the baby boom generation retire and become recipients of benefits, they and their employers also stop contributing payroll taxes to the system. The trust fund is used to make up the difference. When people hear the government estimates the trust fund would be empty by 2033, many assume this means no benefits will be payable.

The fact is that payroll taxes being collected at that time are estimated to be enough to pay around 75 percent of promised benefits. No doubt, a 25 percent across-the-board cut is serious. My FRA comes in 2034 so I can’t help but be concerned. Nonetheless, I think assuming zero Social Security benefits in the future is too cautious a position to take.

I would note that in a recent "Nerd's Eye View" blog post, advisor Michael Kitces recalculated the real return possible from delaying Social Security if benefits were cut 30 percent in the future. Naturally, the returns are not as terrific as they are as Pfau arrived at with no reductions, but the real returns were still better than other "safe" alternatives including TIPS.

Changes are needed, but what those changes will be, exactly, remains a mystery to us all. Myriad changes can affect the attractiveness of delaying. Will the retirement age be raised again, will 62 remain the earliest age benefits are payable? Will delayed credits still exist at the current 8 percent annual rate? Will Congress rescind the ability to "file and suspend" or file a restricted application? Would changes be imposed on people who are currently delaying or just some of those who would have the choice in the future?

Regardless of what you think the answers to those and other questions may be, it is fair to say that the fear of changes that drive many early claimers is not entirely unwarranted. Neither are the other main reasons people claim early -- short life expectancy and simply needing the money.

As noted earlier, someone with a short life expectancy is making a sound choice by claiming early in some cases. I say “some cases” because we have to remember that it doesn't matter which spouse passes away first; the survivor gets only the larger retirement benefit of the two spouses. If the sick spouse has the larger benefit, it is usually best for the sick spouse to delay claiming even though the sick spouse is the one with the short life expectancy. The healthy spouse would be the one to claim early.

While many who claim early are doing so because they living paycheck to paycheck, other Americans need the money for other causes.

One would be a temporary job loss. I recently spoke with a 64-year-old man who had been laid off but was still able bodied and actively looking for work. He had started receiving Social Security benefits knowing that at age 66 (his FRA) he could suspend his benefits and receive delayed credits until he lifted the suspension up to age 70. Further, if he went back to work soon and earned so much as to have benefits withheld, at age 66 his benefits would be adjusted up to compensate for the withheld benefits.

For some, claiming early means truly retiring with much less anxiety about portfolio risks. Take someone that can be happy on $40,000/year who has $500,000 and a $20,000/yr. Social Security benefit at age 62. If he takes the Social Security, he only needs $20,000 from his holdings. That’s a reasonable 4 percent withdrawal rate. If he opts to delay and has a bad year, say a 25 percent drop in his portfolio, the math could change his comfort level dramatically.

$500,000 less $40,000 is $460,000. Drop that 25 percent and he is left with $345,000 and the $41,200 needed in year two (3 percent inflation), represents a withdrawal rate of over 11.5 percent.  Even if he turns on Social Security ($21,400 at 63), his withdrawal rate is a much less comfortable 5.74 percent.

Use whatever numbers you like for a comfortable withdrawal rate. It will still be true that delaying Social Security can put more stress on a portfolio. A good generalization like “delaying is smart,” can’t apply across the board.  Every situation needs to be evaluated independently. Financial planning is not about rules of thumb.

Dan Moisand, CFP, has been featured as one of the America’s top independent financial advisors by Financial Planning, Financial Advisor, Investment Advisor, Investment News, Journal of Financial Planning, Accounting Today, Research, Wealth Manager, and Worth magazines.  He practices in Melbourne, Fla. You can reach him at [email protected]