Retiring with children - dependent Soc Sec

[ospreyjp]

I would love to hear from those who have retired with children and how drawing dependent social security at 62 factored in.

In my case, I plan to retire at 56 (2021) and bridge the gap through investment drawdowns until I reach 62. At 62, I will still have 3 children in high school and junior high. This, combined with a stay-at-home spouse will give us 150% of my full SS benefit. Even locking in lower lifetime benefits, the extra benefits received will offset these assuming I don't live into my 90s (even if I did, retiring early is worth it to me!)

 

[pb4uski]

Have you run your situation through opensocialsecurity.com?

It will tell you you optimal claiming strategy and considers your kids benefits in its calculations.

Theck the box at the top of the page.

 

[beowulf]

I think you really need to speak with the people at SS. The max benefit someone can receive today at age 62 is $2,265. The kids will add another $1,133 to that amount. That will go away when the last kid is 18 (can be a year longer if they haven't graduated HS). The computations are complex, but your stay at home spouse will not increase what you get as it would put you over the 150% limit (that would include all 3 kids and your wife if she doesn't qualify for SS on her own).
In addition, you (and your wife) will be locked into that $3,398 for the rest of your life (plus colas). And, more importantly, none of us have any idea what will happen to SS by 2027. I would not bet that the benefits would be the same as now. I don't know how long you have been working, but your benefit is based on your highest paid 35 years of work. But I do assume you have run all your numbers through the SS calculator.

 

[ospreyjp]

Thank you for the feedback on my post. Yes, I have run the numbers and am focused on the SS and am counting on using it in addition to a FED pension and drawdowns from investments (Roth, TSP, taxable). I was calculating the 150%, but from what I have read this is 150% of my full SS payout at 67 not the reduced amount at 62. Once the kids drop off (19 or graduated from high school), I would revert to the reduced age 62 figure.

I would be interested to hear from anyone who was incentivized to draw SS early to take advantage of this. I realize most did not start a family as late as I did (thank goodness my wife and I opened and funded 529s!)...

 

[tb001]

We’re in a similar situation, but got a later start on kids, so the numbers are even easier for us! When we last ran the numbers it was a no brainer to have DH take SS at 62. That’s less than 5 yrs away for us, so we’re crossing our fingers not much changes in that time.

Just make sure you’re correctly calculating your family max. I think for us there was no added benefit for me to be included because we hit the family max with the kids alone. I believe I can then file on DH’s or my SS at FRA or later.

You didn’t ask, but if you’re counting on SS, make sure you’ve done your homework on what it will do to your taxes, any potential aca impact, what happens in the event of a death or a spouse, etc...

When you have dependents, the math and the rules get more complicated and most planners aren’t well versed on this. It’s worth having someone double check your numbers.

 

[NYEXPAT]

I have been collecting for 5 years and it id the greatest thing since Netflix! I am 67, wife is 39 and kids are 5 and 15. When oldest goes off at 19, the wife will start collecting until the youngest is 16. Basically planned our family to max out SS until I am 80. We need to move to the USA for 5 years in order for my wife to collect.We were scheduled to be there already but Covid delayed my wifes ¨green card¨ and our moving date. Now scheduled to move the end of this year. Wife is travelling to the USA tomorrow to check out our new abode!

 

[Looking4Ward]

I have been collecting for 5 years and it id the greatest thing since Netflix! I am 67, wife is 39 and kids are 5 and 15. When oldest goes off at 19, the wife will start collecting until the youngest is 16. Basically planned our family to max out SS until I am 80. We need to move to the USA for 5 years in order for my wife to collect.We were scheduled to be there already but Covid delayed my wifes ¨green card¨ and our moving date. Now scheduled to move the end of this year. Wife is travelling to the USA tomorrow to check out our new abode!

How can your wife collect SS at 39?

I'm in a similar situation, my soon to be wife is 38 with a two year old, she received her US citizenship last summer. I have a 15 year old son. When I turn 62, I'll be able to collect on his behalf for a year until he turns 18. I should also be able to collect (up to the 150% max) on behalf of my stepson for another 14 years.

 

[NYEXPAT]

How can your wife collect SS at 39?

I'm in a similar situation, my soon to be wife is 38 with a two year old, she received her US citizenship last summer. I have a 15 year old son. When I turn 62, I'll be able to collect on his behalf for a year until he turns 18. I should also be able to collect (up to the 150% max) on behalf of my stepson for another 14 years.

The wife will not be able to collect until she has been in the USA for 5 years and then will only be able to collect until our youngest is 16, so approx 6 years collecting.

 

[Looking4Ward]

The wife will not be able to collect until she has been in the USA for 5 years and then will only be able to collect until our youngest is 16, so approx 6 years collecting.

I understand - but are you referring to your wife collecting for herself or her collecting on behalf of the youngest?

I'm trying to figure out how your wife could collect SS being younger than 62.

 

[NYEXPAT]

I understand - but are you referring to your wife collecting for herself or her collecting on behalf of the youngest?

I'm trying to figure out how your wife could collect SS being younger than 62.

Sorry, she will be collecting on behalf of our youngest.

 

[jj]

I understand - but are you referring to your wife collecting for herself or her collecting on behalf of the youngest?

I'm trying to figure out how your wife could collect SS being younger than 62.

This would be Child-in-care benefits where the spouse could be any age to collect on the other spouse's SS record.

https://www.forbes.com/sites/tomhag...y-benefits-dont-forget-the-kids/#7a42f04ad304

 

[jj]

I would love to hear from those who have retired with children and how drawing dependent social security at 62 factored in.

DH took SS early at 62 when we ran the numbers and realized that waiting until 70 didn't make financial sense for our situation. Our child was 9 when his 62nd birthday rolled round and neither of us was in paid employment.

This article by Michael Kitces fleshes out the scenarios.

https://www.kitces.com/blog/why-soc...-it-a-good-deal-to-start-early-and-not-delay/

'But in many situations, the potential dependent and spouse’s benefits are so large – even with the “maximum family benefit” limitations – that the best strategy, even in the long run, is to start benefits as early as possible (especially if the Earnings Test will not apply!).'

 

[wolf]

OK, Done it. Worked well for us. Adopted 2 children. So, when I was 62, able to collect my SS, and SS benefits for both children, who were still young.

Made appointment with SS, at the time. So everything verified. Forget the exact details,
but I think, when Child turns 18, or finishes high school, the benefits stops. One child,
turned 19, but still in High School, so benefits continued.

Here's one interesting note. The dollar amount collected was say $ 750 per child.
(forget the exact amount, was long ago). So collected $ 1500 total for 2 children.

When 1 child turns 18/or finish High School, $750 stopps. BUT, the other child,
gets $750 + some more. Forget the amount, but it was good.

Not sure if you are aware of this. If not, ask SS.

So, if you calculate, the total amount of $ collected. If you retire at 62, it makes good sense. IMHO.

 

[ospreyjp]

I understand that there used to be a requirement to fill out a worksheet for the SSA to show where the funds were spent. Apparently that is no longer the case, which makes the whole thing less tedious.

At 62 I will have children ages 16, 14, and 11. Even as the oldest ages out pretty quickly, my wife will get 5 years of benefits for care of the youngest. I should be at 150% for those first five years and then progressively reduced after that.

Can anyone verify that the benefits are calculated based on 50% of the full retirement for each dependent and not on the reduced age 62 amount?

I plan to bridge the gap between retirement next year at age 56 and when I can draw the enhanced SS at 62 with investment withdrawals. Fortunately, my Fed health insurance will stay with me along with a reduced pension that kicks in next year. I am glad to hear others have been able to take advantage of this too. Most of the folks I have mentioned my plan to have never heard of this older parent SS benefit.

Now as long as Washington doesn't throw it out on the way to fixing SS [emoji6]

 

[tb001]

Yes, I learned about it here! When our vanguard rep was going through my calculations I swear he almost gleefully told me I’d screwed up SS. I went on to school him on this benefit. By the end of the conversation he had figured it out, but we probably spent 30min of our one hour call we me educating him!

 

[RE2Boys]

See https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html

Ultimately, this formula yields a maximum for each family that is between 150 percent and 188 percent of the worker's basic Social Security benefit, or PIA. The final amount is rounded to the next lowest ten cents. The dollar amounts in the family maximum formula increase each year according to average wage growth

 

[RE2Boys]

I started SS at age 63 with two dependent sons, age 15 and 13. You will be asked to certify that the benefits received for each child was spent on their support. Each child will receive a SSA-10999R to be reported on THERE income tax return if they are otherwise required to file. At age 18, the checks must go to a bank account with their name and SSN. Benefits stop when graduate from high school or age 19 and 2 months. When my first son stopped receiving benefits, the benefits for the second son doubled in order to still meet the family maximum.

 

[momoftwo]

It IS complicated.
Our family has a similar situation.
I had longer work history, claimed SS at 63.
Our adult disabled child receives 1/2 of my FULL benefit (not my reduced age 63 benefit). She will collect for life.
DH, age 67, collects on my record. He gets a benefit larger than his own but less than our daughters.

We met with a SS rep in person before Covid. He was well versed in our scenario.

 

[NYEXPAT]

I started SS at age 63 with two dependent sons, age 15 and 13. You will be asked to certify that the benefits received for each child was spent on their support. Each child will receive a SSA-10999R to be reported on THERE income tax return if they are otherwise required to file. At age 18, the checks must go to a bank account with their name and SSN. Benefits stop when graduate from high school or age 19 and 2 months. When my first son stopped receiving benefits, the benefits for the second son doubled in order to still meet the family maximum.

Bolded, no longer applies!

 

[Ed B]

I am only 60 so two more years, but on Feb 19th of this year we adopted our 9 year old son. It was BY FAR the high point of 2020. That changed my plan from a year to year decision on when to start SoSec, to starting at 62. Right now my benefit at age 62 will be ~$2000 and change. So our son will be collecting ~$1000/month until he graduates high school. He will graduate at age 19 on his birthday month.

I have given consideration to locking in the reduced benefit for the rest of my life and my wife's life but that $108000 + cola over those 9 years will go a long way toward getting him started in life.

 

[tb001]

I am only 60 so two more years, but on Feb 19th of this year we adopted our 9 year old son. It was BY FAR the high point of 2020. That changed my plan from a year to year decision on when to start SoSec, to starting at 62. Right now my benefit at age 62 will be ~$2000 and change. So our son will be collecting ~$1000/month until he graduates high school. He will graduate at age 19 on his birthday month.

I have given consideration to locking in the reduced benefit for the rest of my life and my wife's life but that $108000 + cola over those 9 years will go a long way toward getting him started in life.

Do you have to lock in the benefit for your wife? Couldn’t she file later on your SS and not receive a reduced benefit? It’s been a while since I looked at the specifics...

 

[Ed B]

I would only impact mine. She can wait to take her SS since our son will only get half of one or the other. But impacts her if she lives longer than I do because my social security even at 62 is twice as much as hers at her full retirement age.

Do you have to lock in the benefit for your wife? Couldn’t she file later on your SS and not receive a reduced benefit? It’s been a while since I looked at the specifics...

 

[NYEXPAT]

Your wife should be entitled to a caretaker benefit as well until your son turns 16!

 

[tb001]

I would only impact mine. She can wait to take her SS since our son will only get half of one or the other. But impacts her if she lives longer than I do because my social security even at 62 is twice as much as hers at her full retirement age.

But can’t she file on your SS? And if she does, isn’t that based on your expected SS at FRA? I didn’t think her filing on your SS was impacted in any way by when you file. Maybe I’m confused and misunderstanding your situation?

 

[Ed B]

She is already collecting SSDI which is her FRA amount. The reason it will impact my wife when I pass is my SS is considerably more so she will switch to mine. As far as I know, and I hope I am wrong, she will get the amount I received by starting at age 62 rather than a larger amount if I had waited.

I would be thrilled to learn that she can get my FRA amount at my passing if she is collecting hers at her FRA rate. I don't think that is the case.

But can’t she file on your SS? And if she does, isn’t that based on your expected SS at FRA? I didn’t think her filing on your SS was impacted in any way by when you file. Maybe I’m confused and misunderstanding your situation?