Q: If you have already stopped working, are the Social Security election ages (62, 66, and 70) equivalent to each other based on life expectancy statistics? Tony Kuchta, Frankfort, Ill.

A: Yes. Social Security's benefit reductions for taking your retirement benefit before full retirement age (and increases in benefits for delaying taking your retirement benefit after full retirement age) were established years ago to be actuarially fair, says Larry Kotlikoff, a professor at Boston University and co-author of Get What's Yours: The Secrets to Maxing Out Your Social Security.

According to Kotlikoff, Social Security's calculations are based on a real return of 3%. Real return is your gain after inflation. "A 3% real return is far better than you can get on today's market," he says. "In fact, the current real return from 30-year inflation-indexed bonds is less than 1%."

The actuarial fair adjustment used by Social Security credits you not just for the loss of real interest in not taking your benefits early and being able to invest them at the real interest rate, it also credits you for the possibility of not living to collect your benefits, he says.

"In waiting longer to start collecting you are giving up getting money in years when your chances of being alive are quite high in exchange for larger amounts of money in years when your chances of being dead are quite high," says Kotlikoff.

Because Social Security is compensating for longevity risk — actually overcompensating since it made its calculations when mortality risk was higher — and over-compensating for foregone real interest, Kotlikoff says waiting to collect is a great deal if there aren't other good reasons to take benefits early.

Robert Powell is editor of Retirement Weekly.