I am 62 years old and plan to retire when I turn 63 in August, 2018. I have worked my entire adult life and easily qualify for SS benefits. My wife is two years behind me and plans to retire with me in August, 2018. She’ll be 62 at that point, has worked most of her adult life and qualifies for her own SS benefit. We are trying to determine if it would be beneficial to have her climb on my SS benefit plan. I understand her benefit would be ½ of my full retirement benefit, which would be greater than if she filed for SS independently.
We also have a daughter, age 26, who draws SSI due to her congenital birth defect (spina bifida). I understand that when I retire, my daughter automatically goes on SSDI, which (I believe) is supposed to be ½ of my full retirement benefit amount. I am trying to determine our best course of action.
I know there’s a maximum payout per family under my SS record. My current SS statement says our maximum family benefit = $3,971
My full retirement benefit (age 66 + 2 months) = $2,356
My benefit at age 63 (about) = $1,800
My wife’s SS benefit if she retires at age 62 = $902
So….if I get $1,800/mo, and my wife gets ½ of my full retirement benefit ($1,178) and my daughter gets the same ($1,178), that totals up to $4,156, which exceeds the maximum family benefit by $185/mo.
How does SS determine which family member would get the smaller amount? Can we choose?
Your recommended course of action? Thanx!
When benefit payments must be reduced due to the family maximum, each beneficiary is allotted an equal share if their original rates are the same. Any percentage reduction for age is then subsequently applied. Even if you take a reduced benefit at age 63, though, your full retirement age rate (PIA) would be subtracted from the family maximum when calculating the amount payable to your wife and child. So, if your figures are correct, if you file at age 63 and your daughter qualifies for disabled adult child's (DAC) benefits and your wife qualifies for an unreduced spousal benefit based on having a disabled child in care, they would each get roughly $807 per month on your record (i.e. ($3971-$2356)/2).
However, if and when your wife files for benefits on her own record the family maximum on her account could be combined with your family maximum. That is, assuming that your daughter would qualify as a DAC on your wife's record, which sounds likely from your description. Although your daughter could only actually be paid DAC benefits on one record at a time, the combining of family maximums would likely free up enough benefits to permit your wife and daughter to each receive up to a full 50% of your PIA. The downside is that if your wife files on her record prior to her full retirement age (FRA), her own benefit rate would be reduced for age.
It sounds like your family has numerous viable filing options available to you, and the 'best' option largely depends on your personal preferences and assumptions about the future. You should strongly consider using the maximization software available on this website in order to compare your options and determine the best overall filing strategy for your family.