The Social Security system was never intended to be the sole means of support for retired Americans, but it is nonetheless the most important source of income for many retirees.
However, what Americans do not know about Social Security benefits can really hurt them as they plan out their golden years, say financial advisors.
There are a variety of points that most Americans are just not aware of when it comes to that important government program. For instance, did you know that you can take Social Security retirement benefits early? Or, that Social Security isn't merely a retirement benefit.
Also, for those who can handle it financially, it's a great economic strategy to take retirement benefits late, as late as age 70.
Additionally, nonworking spouses, even those who have never had an income, are eligible for Social Security benefits.
With benefits from the program accounting for an average 38.2 percent of income for people over age 65, according to the Employee Benefits Research Institute, making the most of those benefits is crucial. (Social Security benefits comprise an even higher percentage of income for less-wealthy Americans.)
Laurence Kotlikoff, an economist at Boston University and president of personal finance software firm Economic Security Planning, said he has three basic rules for maximizing Social Security benefits: wait to collect the benefits; collect all the benefits you can, including spousal and survivor benefits; and don't let either rule mess up the other one.
The key is balancing what you're willing to do now with how you'd like to live in retirement. "Nobody wants to starve now and binge when they're 90, or vice versa," Kotlikoff said. "The idea is to have a consistent standard of living through your retirement."