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Why it pays to get reduced Social Security benefits

Susannah Lee

Social Security. It's a topic, we're going to hear a lot more about as the presidential campaigns heat up. It’s also one thing all Americans, regardless of political party lines can agree on - we all want it.

A Gallup poll found more non-retirees – now more than at any point in the last 15 years - are planning on Social Security to be a major source of their retirement income, nearly 10% more than a decade ago. The survey did find the majority of people still plan on 401k plans as their top source of retirement income.

Figuring out how to take Social Security benefits can get complex and making the right decision could mean thousands of dollars. You can take it as early as age 62, it will, however, reduce your benefits by 25% from the amount you would receive at the full retirement age of 66.

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Most financial experts would advise to hold off for the full Social Security benefit but not David Bach, the vice chairman of Edelman financial services and the author of "Smart Couples Finish Rich - 9 Steps to Creating a Rich Future for You and Your Partner.

“If you don’t need the money, take it early,” advises Bach. His reasoning is “at 62, 63, 64 – you’re in the best shape of your life…there’s so many things people in their 60’s can do to enjoy that money so if you don’t need it, I suggest taking it early.”

Unfortunately, the reason most Americans are not sticking it out, for the full benefits is because they can’t afford to wait. And despite Social Security probably being the backbone of this country’s retirement income system, ongoing chatter about the vitality of the program lasting puts Americans on edge.

Bach says he’s not concerned the program, even as it faces huge deficits, won’t be around for future generations. “There are a lot of ways solve it, so we need to stop scaring the American public and making them think it’s going away, it’s not, it just may change.”

Bach is certain “Social Security will be here because Americans are dependent on it. You can’t take it away.“

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