Many boomers opting for early Social Security

Although it's a questionable decision for many, almost half of 61-year-olds surveyed recently said they'll begin collecting Social Security when they reach 62, the earliest people can apply.

The survey by Fidelity Investments shows that surprising result -- as well as a widespread lack of understanding of how Social Security works. For instance, "56% do not know when they will be eligible for full Social Security benefits (age 66 for those born 1943-54)," Fidelity said. About a third wrongly think that all benefits are exempt from taxes.

Applying at age 62 locks you in at a lower benefit for life (with one exception we'll describe below.) Is it really worth settling for a lower standard of living just to increase the chances that you'll collect Social Security for a few extra years?

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It appears that some people want to collect as soon as possible because they're afraid Social Security won't last. "A different survey of 5,000 older employees by consulting firm Watson Wyatt released earlier this month found that 51% of workers ages 50 to 64 are not confident about receiving their promised Social Security checks after they retire," said U.S. News & World Report.

People surveyed by Fidelity cited "immediate financial needs and health and longevity concerns" in deciding to collect at 62. About 77% said they're counting on the money to pay for basic expenses like food and housing. (Sadly, for a third of people 65 and older, Social Security is at least 90% of their retirement income.)

Before you decide to take the early benefit:

• Use this Social Security Retirement Estimator to get a better idea of what you can expect to collect. To get some clue about how long you'll live, try out this longevity calculator. If you're married, there's even more to consider. For instance, one study showed that in many cases, it's best if a wife begins collecting at 62 and the husband delays Social Security until age 69. (Read more about that here.)
• Find out if your benefits will be taxed and how continuing to work could affect what you receive.
• Remember this: Your benefits increase by about 7% each year you delay Social Security until age 66, and even more if you put it off until 70. (For more info, see this handy chart.) If you collect early, you can change your mind later and apply again. But you'll have to pay back all the Social Security you received up to that point.