By RUSSELL GLOOR
Social Security Advisor
Dear Rusty: I was 62 in February and my 44-year-old wife and I have three young daughters ages 5, 7 and 13. My 2019 income via wages will be about $98,000. My wife does not work outside our home. In round numbers my Social Security full retirement benefit is estimated to be about $3,000 per month if I wait until 2023. I understand I am eligible to start receiving reduced benefits at age 62 and I could also collect an additional 50 percent up to 80 percent of my full retirement benefit for my young daughters until they graduate from high school. My questions are: What determines where in the range of between and 150 percent and 180 percent my extra benefit would be? Would my benefit be reduced because of my income (I know my benefits may be taxed but the question is, will my benefits be reduced)? Finally, is my wife also eligible to receive any benefits because we have three young children? Signed: Older Father
Dear Older Father: In your situation the Family Maximum would apply and there is a rather complex formula which Social Security uses to determine that maximum. The computation is based upon your “primary insurance amount” (PIA), which is the amount you are entitled to at your full retirement age (regardless of when you claim). Your PIA is broken into four parts, and a percentage of each part is taken as an amount which contributes to your family maximum. The four parts (in 2019) and percentages taken are: 150 percent of the first $1184 of your PIA; 272 percent of your PIA amount between $1185 and $1708; 134 percent of your PIA amount between $1709 and $2228; and 175 percent of your PIA amount over $2228. Your family maximum will be the sum of those computations. What’s left after your PIA is deducted is equally apportioned among your other eligible beneficiaries. For example, if your estimated 2023 PIA is $3000, using the above formula your family maximum would be about $5245. After subtracting your PIA amount, there would be about $2245 to be apportioned evenly among your four eligible dependents ($561 each). But no dependent benefits can be paid until you start collecting your benefits.
Once your benefits start, your wife will be eligible to collect “child in care” spousal benefits, but the amount will be limited by the Family Maximum as described above. You already know that your children can no longer receive benefits when they graduate high school (or turn 19). When a child is no longer receiving benefits, the amount they were receiving is added proportionately to your remaining dependents. When your youngest daughter reaches 16 years of age, your wife can no longer receive child-in-care spousal benefits, but she will be eligible for regular spousal benefits when she turns 62.
Yes, your Social Security benefit will be reduced by your earnings if you claim SS benefits before your full retirement age and your current earnings are over the annual earnings limit. If you claim in 2019, you will not be entitled to benefits for any month you earn more than $1470. After this first year, you’ll be subject to the annual earnings limit (which changes yearly but for 2019 is $17,640) and exceeding that limit will mean that SS will withhold $1 for every $2 you are over the limit. In the year you reach your full retirement age (which is 66½), the earnings limit goes up by about 2.5 times ($46,920 for 2019) and the penalty is less ($1 for every $3 over the limit), and once you reach your full retirement age there is no longer an earnings limit. But if you exceed the annual limit, SS will withhold future benefits until they have recovered what is due. But here’s a big red flag: anyone collecting benefits on your record will also be “contingently liable” for any overpayment made to you, so their benefits will be withheld as well until Social Security recovers any overpayment as a result of you exceeding the earnings limit.
The information presented in this article is intended for general information purposes only. The opinions and interpretations expressed in this article are the viewpoints of the Association of Mature American Citizens Foundation’s Social Security Advisory staff. To submit a question, contact the Foundation at firstname.lastname@example.org.