How Much Ss Can I Draw
Understanding the Family Maximum Social Security Benefit
Social Security is an important part of retirement planning both for the parents and the individual with a disability. Family unit members tin claim benefits tied to the primary household earner one time he or she begins receiving Social Security retirement benefits; nevertheless, at that place are limits how much the family in total tin collect. This commodity discusses the family unit maximum benefit, how it works, and how to program for these limits in retirement.
What is the family maximum social security benefit?
The family unit maximum social security do good is the maximum corporeality that tin exist paid on a worker's earnings record. If the principal household earner begins receiving Social Security benefits at retirement, the spouse, the individual with disability, and others may qualify for and so-called "Social Security auxiliary benefits" based on the primary workers earnings. (For the adult child who qualifies to receive Social Security benefits based on the parent'due south work record these benefits are referred to equally SSDI benefits.)
In nigh cases, spouses are entitled to receive up to fifty% of the primary earner'southward benefit at their retirement age or receive their ain SS do good, whichever is higher. Likewise, an adult kid with a disability tin receive upwardly to fifty% of the primary earner's benefit nether the SSDI benefit. The limit comes into play when ii or more than auxiliary beneficiaries draw benefits off the chief earner's SS earnings at the same time. The family maximum limit is 150% to 188% of the primary earner's chief benefit amount (PIA). The exact percentage formula can be found on the SSA website.
To illustrate how the formula works, let'southward say in that location is a family unit of three: a main breadwinner, a spouse, and an adult child with a disability. The spouse and the kid have no Social Security piece of work earnings. The master household earner has a PIA of $2000. Using the Social Security family unit maximum formula, the family maximum is determined to exist approximately $3600 per month or 180% of the primary earner'southward PIA.
Past themselves, the non-working spouse and the kid with a disability could receive $1000 per month in SS benefits; however, because of the family maximum do good, the family unit tin can only receive an boosted $1600 in a higher place the primary earner's benefit. In this example, the spouse's and the individual'south SS benefits are express to $800 per month each.
Importantly, Social Security applies any SS work earnings of the spouse towards the fifty% spousal benefit, and so let's improve our example to say the "bottom earning" spouse based on their piece of work earnings alone would receive $400 per month from Social Security. Considering the bottom earning spouse is receiving $400 on their own record, they only tin claim $600 per calendar month more than from the main earner's benefit to raise their total SS benefit upwards to the 50% threshold ($thousand – $400).
In this new case the spouse past themselves could claim $600 additionally from the primary earner'south benefit. Combining this corporeality with the individual with a inability's benefit yields a combined benefit for the spouse and adult child of $one,600, which is the aforementioned as the family maximum benefit. In this instance, in that location is no punishment imposed on each beneficiary's income. To the extent that both spouses have Social Security piece of work earnings, the family maximum may simply have a limited or no bear on on the full Social Security benefits received past the family.
Note that the family maximum does non use if the private with a inability is receiving SSI benefits only, since those benefits are not based on the piece of work earnings of the parent. Besides, importantly the family maximum does not apply to ex-spouses who may be cartoon off the primary earner's benefit.
Finally, the family maximum formula is much tighter in cases where the primary earners themselves are receiving SSDI benefits. In these cases, the formula restricts the additional family benefit to 100 to 150% of the master earner's benefit [i]
Planning around the family maximum
Since special needs families are more than probable to exist impacted by the family maximum do good, the key planning tool is to know in advance what the estimated Social Security benefits are for each household member and so decide if the family maximum applies. The PIA for both spouses and individual with a disability can be estimated from the Social Security website.
After the PIAs are known, the family maximum tin be calculated. If the combined SS do good of each household member is less than the family maximum benefit, no penalty is practical. If the total is greater, than the amount of the penalty tin be determined, and the adapted Social Security benefits can be estimated for each beneficiary.
The Social Security do good maximum just applies in situations where two or more beneficiaries are drawing benefits off the primary earner's benefit. In many instances, special needs families will accept two or more than beneficiaries that could be receiving SS benefits from the main earner'southward benefit. These families should plan by estimating what the likely Social Security benefits are for each person to determine if the family maximum applies.
References
- AARP: What is the Family Maximum for Social Security Benefits.
- Social Security: Formula for Family Maximum Benefit
- Social Security: Benefits for Your Family unit
[i] The formula for disabled workers is 85% of the workers' Boilerplate Indexed Month Earnings (AIME) not less than 100% of their PIA or greater than 150% of the PIA. See https://www.ssa.gov/OACT/COLA/dibfamilymax.html
Source: https://cmpfinancial.com/understanding-the-family-maximum-social-security-benefit/
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