Social Security: The Smart Moves To Make In 2020

Social Security's importance to the pocketbook of the average American retiree can't be overstated. More than 60% of all retired workers lean on their Social Security payouts to account for at least half of their monthly income, and an estimated 15 million-plus use their benefits as a means of pulling themselves above the federal poverty level. Without this program, poverty rates among the elderly would be more than four times higher than they are today.

Furthermore, it's a program that's expected to play a key role in helping future generations of American workers make ends meet. An April 2019 Gallup survey found that 83% of respondents expect Social Security to be a "major" or "minor" source of income when they retire. That compares to the 90% of current retirees who told Gallup that the program is a "major" or "minor" income source right now.

Whether you're in your early 20s and just getting your feet wet in the workforce or you're nearing retirement, there are a couple of Social Security moves you should consider making in 2020 that are certain to put you in a better position once you begin taking your payout.

1. Create a "my Social Security" account

With a new decade just a month away, the most actionable suggestion I can offer is to create a "my Social Security" account, which'll allow you to access important Social Security information and manage your personal account online. This isn't to say that you still can't make an appointment at your local Social Security Administration office or speak with a representative, but many of the answers you might be seeking can now be found with the click of a button.

What can you do with a "my Social Security" account? In no particular order, you can:

• Request a replacement Social Security card
• Change your address and/or phone number
• Review your Social Security statement (these were previously mailed out every five years between the ages of 25 and 60)
• Check your earnings history
• Apply for Social Security retirement or spousal benefits
• Apply for Social Security Disability or Supplemental Security Income
• Request a benefit verification letter if you're trying to verify income for a lender
• Set up direct deposit for your Social Security benefit check
• Print your SSA-1099 for your federal or state income taxes
• Get a replacement Medicare card

And this is really just a sample of the functions a "my Social Security" account offers. You don't need to be in your 60s to take advantage of these benefits, so be sure to enroll if you haven't already done so.

2. Double-check your earnings history

Next, and as somewhat of an extension to the previous action of setting up a "my Social Security" account, take the time to really pore over your earnings history.

As you may already know, your earnings history is one of a handful of factors that goes into determining your monthly benefit at full retirement age. Your 35 highest-earning, inflation-adjusted years are what the Social Security Administration (SSA) uses when calculating your payout. Therefore, it's in your best interest to know what that average is going to be ahead of time and ensure that all is correct in your SSA file.

On the whole, the SSA tends to be a very efficient agency -- but it's not infallible. Mistakes happen, and it's a lot easier to fix those mistakes in your earnings history before you begin taking your Social Security benefit than after the fact. As we head into the new year, take the time to make sure that your earnings history on file with the SSA matches what you have on your federal income tax returns.

3. Assess your finances and health to develop a game plan

Lastly, you should take the time to assess the variables that matter to you, which will ultimately make it easier to decide when to begin taking your Social Security retired-worker benefit.

For example, you'll want to take a good look at your finances to see if you're on track to meet your personal retirement goal(s). The SSA reminds folks that retirement benefits are only designed to replace about 40% of the average worker's wages/salary. In other words, it's not meant to be your primary source of income. Thus, you'll want to review your saving and investing game plan to ensure that your eventual payout remains nothing more than a minor source of income during retirement.

This is also a good time to create a game plan with a spouse. If you're married, strategizing with your partner can lead to the household bringing in a lot of extra money during your senior years.

Also, don't forget to take care of yourself. Your health is another of many factors that will ultimately play into your decision of when to begin taking your Social Security benefit.

With 2020 around the corner, this simple homework assignment should put you on track to get the most out of Social Security when you retire.

This article originally appeared in the Motley Fool. The Motley Fool has a disclosure policy.