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The Tradeoff With Early Social Security Benefits

The hardest decision with Social Security is when to start taking benefits. One positive of taking early Social Security benefits is that you get to preserve your investment portfolio longer. But there's a trade-off you make by choosing that course for your finances.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, goes through the trade-off involved in taking Social Security benefits early. On one hand, if you take early benefits, you'll leave your portfolio to grow, and with the stock market having performed so well lately, that can look like a smarter proposition than taking money out and letting your monthly Social Security benefit get larger. But Dan notes that the question really comes down to your risk tolerance, as delaying Social Security gives you a certain return of about 8% per year on your monthly benefit, while taking early benefits to let your portfolio grow involves market risk that can either boost or hold back your total return. Dan concludes that everyone's financial situation is different, making the best choice vary from person to person.

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Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Have general questions about Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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