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GOLDEN VALLEY, Minn. - Social security plays an essential role in many Americans' nest eggs, yet many individuals don't know much about it.

A sad situation given that a great many individuals will end up relying heavily on the strength of this benefit to see them through increasingly longer retirements.

Determining when and how to begin taking benefits is a decision that should be thoughtfully considered.

Financial advisor,Dan Ament with Morgan Stanley, visits KARE 11 Sunrise to talk about when and how to begin using those benefits.

Social Security is 40% of average retirees income - Social Security benefits remain a key part of many Americans' nest eggs-with payouts today comprising nearly 40% of the average retiree's income, according the LIMRA analysis of U.S. Census Bureau's Current Population Survey, March 2010

75% take benefits before full retirement age - Given the large deductions for electing early and the guaranteed 7-8% annual increase for delaying election, it is somewhat surprising that so many individuals are receiving reduced benefits. Perhaps people claim them early simply because they can. Perhaps they are concerned about the future of Social Security. There are potentially endless reasons why individuals may take their benefits early, but there may be one commonality - it is likely they have not considered the impact this decision will have on their monthly income for the rest of their lives.

50% chance of living to age 92? For married couples aged 65, one spouse has a 50% chance of living to 92 - Annuity 2000 Mortality Table, Society of Actuaries. The answers to these and other questions can help you create a plan that can help maximize Social Security.

Full Retirement Age (FRA) - Age 65 for those born 1937 or earlier, add 2 months for each year from 1938-1942, age 66 for those born 1943-1954, add 2 months for those born 1955-1959, age 67 for those born 1960 or later.

The Cost of Early Benefits? The reduction when compared to full retirement age(FRA) benefits depends on your birth year. For example, an individual born in 1954 would take a 25% reduction in benefits to take them at age 62 compared to their FRA of 66.

Why Wait? Longevity is an important consideration for determining when to elect benefits. But overall retirement assets are also a critical determinant. Consider that if an individual has fewer retirement assets and a lower risk profile, it may make sense to elect after
FRA.

Planning tips- When determining the best method for electing Social Security, there are many questions to consider: What is the monthly income need in retirement? Do you plan to work in retirement? Are there any health concerns and what is the family history of longevity? Will the individual continue working after collecting Social Security? Can individual benefits be claimed? Is there an entitlement to spousal or survivor benefits? The answers to these and other questions can help you create a plan that can help maximize Social Security.

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