I frequently get questions from soon-to-be retirees who have heard about a “family maximum” that applies to Social Security benefits, and they are afraid that rule will reduce the benefits they are due as a couple.
So, here is the message of this column: The family maximum rules do not apply to a husband and wife getting Social Security benefits all by themselves. These maximum rules only come into play when children are involved. That usually means cases involving children getting benefits on a deceased parent’s account. Or it can mean limiting benefits to families of someone getting Social Security disability benefits. But it also can occasionally apply to retirees who still have minor children at home. When this does happen, it’s frequently because a retiree has an adult child who has been disabled since birth.
But again, the focus of today’s column is the scenario of a husband and wife with no minor or disabled adult children at home.
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Q: I am waiting until age 70 to take my Social Security so I will get 132% of my Social Security benefit. Then my wife, who was a homemaker all her life, will file on my record and she will get 50% of my benefit. So combined, we will get 182% of my Social Security benefit. Our accountant said that will be a problem because Social Security rules set the family maximum at somewhere between 150% and 188% of my benefit rate. The actual percentage depends on factors I don’t quite understand. The accountant sent me this clipping from what he said is the Social Security rulebook.
“RULES FOR RETIREMENT AND SURVIVOR BENEFITS”
“The family maximum formula for Old-Age and Survivors Insurance (OASI) benefits is based on a beneficiary’s primary insurance amount (PIA). The PIA is a beneficiary’s basic Social Security benefit amount before adjustments for retirement age, earnings and other factors. SSA calculates the family maximum using a formula. Ultimately, that formula yields a maximum for each family that is between 150% and 188% of the worker’s basic Social Security benefit, or PIA.”
A: Don’t worry. You’ll note the rulebook section your accountant sent you refers to a “primary insurance amount,” which is essentially your full retirement age amount. That amount can never be more than a 100% rate. You are going to get a higher monthly benefit amount (up to 32% more) because you are delaying filing for Social Security until age 70. But your PIA remains at that 100% rate.
Your wife is going to get a 50% rate. So, the most a husband and dependent wife can get in basic (PIA) combined benefits is 150%. (His 100% PIA rate and her 50% spousal rate.) And that 150% rate does not exceed the lowest family max rate (which is 150%).
If you have a Social Security question, Tom Margenau has a book with all the answers. It’s called “Social Security: Simple and Smart.” You can find the book at creators.com/books. Or look for it on Amazon or other book outlets. To find out more about him and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit www.creators.com.
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