There are three steps you can take right now to boost your Social Security payment before you retire.

Are you nearing retirement age and looking for ways to boost your Social Security?

84% of soon-to-be retirees said that Social Security will be a major source of their retirement income.

This is no surprise since most baby boomers haven’t saved enough to fund their own retirement. They’re relying on Social Security. They’ve paid into the system their entire working lives and were promised a payout in return.

So, it’s imperative that you take the steps to maximize your Social Security before you file.

Here are three things you can implement right now to help you boost your Social Security.

#1 – Review Your Social Security Statement for Accuracy and Optimization.

The Social Security Administration (SSA) no longer mails annual statements to beneficiaries. Since 2014, the SSA has been mailing statements to beneficiaries as they turn 25, 30, 35, 40, 45, 50, 55, 60, and older if you’re not yet receiving payments.

Instead, the SSA pushes its beneficiaries to use the website: https://www.ssa.gov/myaccount/

When you create an online my Social Security account, the SSA will stop sending paper statements all together unless you follow these instructions. For a government website, it’s pretty user friendly and concise. If you haven’t already done so, create an online account with the SSA through this website.

Once you’re in the my Social Security portal, click on “View Earnings Record” hyperlink. You’ll see all of your wages through your lifetime. Compare the earnings you see to your W-2 form or other tracking documentation. The earnings are generally accurate, but in certain circumstances (overseas gov’t employee, self-employment, etc.) may be incorrect.

Made sure the earnings are accurate? Don’t stop there.

Now is a good time to see how many years’ earnings you have populated in your history. Remember, Social Security includes the highest 35 years’ wages into the calculation of your Primary Insurance Amount (PIA).

If you’re going to rely on Social Security as your main source of income in retirement, you should strive to get as close to 35 years of earnings history as possible.

Are you 50 years old and have 25 years of work history? Great, you’ll achieve your 35 years of history at age 60, then you can focus on replacing your lower income years with higher income years.

For example, if during your 20’s you made about $5,000 per year working as a See’s Candies chocolate hustler, you’re able to replace those years with higher income years.

Here’s how it works:

You worked at See’s Candies from 25 – 30 making $5,000 per year.

You graduated law school at 30 and went on to make good money for the next 30 years (ages 30 – 60).

At this point, Social Security would still figure in 5 years from your See’s candy days.

Instead, if you just worked until you’re 65 (assuming you want to and it’s possible), you could replace those low income earning years at See’s Candies with your high income corporate lawyer gig.

Remember that earnings are indexed and that may mean that the money you made when you were young isn’t actually all that low when you factor in the index.

#2 – Optimize Your Spousal Benefit

Your spouse may claim Social Security benefits under your earnings record at 50% of your benefit, or may claim it under their own earnings record.

For example, if your monthly Social Security payment is $2,500 and your spouse’s payment on their own would be $800, your spouse will receive $1,250 ($2,500 * 50% – which is higher than $800).

You’ll obviously want to choose whichever amount is higher, but like all government programs, things can be kind of murky.

Spousal benefits are reduced if you file for them before full retirement age. For those born 1960 or after, if you take spousal benefits early at age 62, you’ll receive 35% less than if you waited until you turn 67.

If your full retirement age spousal benefit is $1,250, as in the above example, you would have to settle for approximately $815 per month, a whopping $435 per month decrease in benefits. That’s about equal to the monthly payment on a really nice car in perpetuity.

But the trade off is payments are made when you’re 62 instead of 67. That is about $39,310 in payments from age 62 to 67. If you wait until age 67, then you would receive $0 from 62 to 67, then an additional $435 per month at 67. From 67 to 90, the extra $435 per month equals $120,060 in aggregate (avoiding all time value of money issues in this paragraph for clarity).

What you should do depends on your specific financial scenario. There is no clear cut answer as to what is optimal in the above example, without taking other factors into consideration.

#3 – Keep More Social Security by Reducing Your Taxes

It’s not exactly boosting your Social Security payment, but keeping more of your Social Security in retirement is just as good as earning more.

Taxes on Social Security payments are complicated! See: How Much Is Social Security Taxed?

Provisional income is a key component in understanding how Social Security is taxed. Provisional income is your adjusted gross income (AGI) plus half of your Social Security income plus any tax-free interest income like muni-bond income.

It may be more beneficial to postpone withdrawing from your Traditional IRA or other deferred account until later, possibly even waiting to withdraw from your deferred account until you’re forced to at age 70 ½.

If you need the income, it may be more beneficial to withdraw from your Roth IRA or other taxable account.

Real life example:

Consider a married couple (couple #1) that has the following income:

  1. Social Security Income of $50,000
  2. Traditional IRA Income of $50,000

This couple will have a Federal tax liability of $8,088 and pay taxes on 65% of their Social Security benefit.

Versus, a married couple (couple #2) that has the following income:

  1. Social Security Income of $50,000
  2. Roth IRA Income of $50,000

This couple will have a Federal tax liability of $0 and pay taxes on none of their Social Security benefit because this couple’s provisional income is $25,000, less than the $32,000 threshold.

The latter couple saved $8,088! In fact, they didn’t pay a dime in Federal taxes and it’s 100% legal and appropriate to optimize your income in this way.

Couple #2 could also withdraw $7,000 from a traditional IRA without going over the threshold. Their Federal tax liability would be zero even if they had the following income sources:

  1. Social Security Income of $50,000
  2. Roth IRA Income of $43,000
  3. Traditional IRA Income of $7,000

How do you boost your Social Security?