Ask Rusty – Will the family maximum limit my benefits?

Dear Rusty: I have a question about the family maximum SS retirement benefit. As I understand it, if the breadwinner is drawing retirement benefits or is deceased, the family maximum is calculated from a formula that yields a figure between 150 percent and 188 percent of the breadwinner’s primary insurance amount — his or her monthly benefit if claimed at full retirement age. That age is 66 and 4 months for people born in 1956 and will gradually increase to 67 over the next few years. Is this calculation only applicable at full retirement age (in my case 66 and 4 months) or is it still applicable if I delay taking SS until 68 or 70? My assumption is the “breadwinner” is the spouse with the higher income. Signed: Planning my Retirement 

Dear Planning: The Family Maximum applies only when more than one dependent is collecting benefits from the record of a worker who is either deceased or collecting Social Security retirement benefits (the “breadwinner”). That might typically be a spouse and a minor child, multiple minor children, or, perhaps, multiple children and a spouse as well.  

The Family Maximum doesn’t apply, for example, when both a current spouse and an ex-spouse are collecting benefits from that “breadwinner” – only when a current spouse and minor children are collecting too. The Family Maximum also does not apply when only one dependent (e.g., a spouse) is collecting benefits from the “breadwinner,” or when no dependents are collecting benefits on the “breadwinner’s” record. Neither would the Family Maximum restrict your benefit if you wait until you are age 70 to claim your maximum personal benefit. So, if your concern is that the Family Maximum might limit your, or your wife’s benefit if you wait until age 68 or 70 to claim, you can discard that concern. 

You are correct that the Family Maximum formula, when it applies, yields a maximum total limit of 150% to 188% of the worker’s “primary insurance amount” or “PIA,” which is the amount the worker is due at full retirement age (FRA) and, as you know, your FRA is determined by your year of birth. If the Family Maximum applies because multiple dependents are collecting SS benefits on your record, Social Security will determine your maximum family dollar amount, deduct your PIA (your FRA benefit) from that amount, and the remainder would be available to be shared equally among your multiple dependents. But if no one else, or only your wife, is collecting benefits on your record, the Family Maximum does not apply. 

This article is intended for information purposes only and does not represent legal or financial guidance. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at [email protected].

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