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SS "Maximum Family Benefits" - Relevant for just 2 people on one record?
Old 05-29-2015, 08:52 AM   #1
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SS "Maximum Family Benefits" - Relevant for just 2 people on one record?

I was looking at SSA online at my estimated (future) benefits statement. I never really paid any attention to the Maximum Family Benefit dollar limitation, figured it really wouldn't apply to me. Now, I'm wondering...

Looking at a per-record case, there is a Maximum Family Benefit, which is computed using data from your record, via a formula with multiple bend points. SSA makes it easy by calculating the max and listing it on the statement.

Doing a search on SSA, and reading some of the items, I can't figure out if this limitation will apply to me/us (DW and I).

The scenario is this: I file and suspend when DW reaches her FRA @ 66, so she would get an equivalent 1/2 of my FRA (PIA) amount. I would wait and start my benefits at my age 70. If I add her estimated benefit on my record, plus mine at age 70, it exceeds the MFB.

First Question:
The few examples they have on SSA have more than 2 people involved getting benefits. Are DW and I, on my record, a "family"? Does MFB apply to us?

Second Question:
To fully describe DW's 1/2 of my FRA benefit, I need to add more detail.
She works at a non-SS job, and will be affected by GPO. The formula for her SS benefit on my record at her FRA with GPO is 1/2 of my records PIA, minus 2/3rds of her pension amount. (She gets 100% of her pension from the entity, and SSA pays according to the formula above). So the SSA would be paying out less than 1/2 of my PIA to her. If I add her expected SS with GPO on my record to my at 70 benefit, the result is below the MFB.
IF MFB applies to us, does it only use the dollars to be paid out by SSA as the basis in determining if MFB has been met/exceeded? Or do they add in some of her pension dollars to determine the MFB threshold?

I cannot find our situation described, at least where I could recognize it.
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Old 05-29-2015, 09:15 AM   #2
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Good Question Telly!

I have always assumed that DW and myself, dual career earners, who have forcasted our SS benefits via the website independently would be paid as forecast unless the law changed.

I assumed that maximum family benefits would come into play in scenarios such as when a retiree has children under the age of 18 who would receive an extra benefit.

Since SS plays a large part of our financial plan (currently $30,000 each, per year, inflation adjusted, running from age 70 to 100), if there is a current rule that limits this payout it would be good to be aware of it.

The examples I have found show a single earner. Have you found a simple example for a dual career husband and wife?

Thanks for surfacing the issue.

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Old 05-29-2015, 09:38 AM   #3
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Okay, I feel better now. Family benefit is a bit of a misnomer. Only makes sense in the context of a single earner family. Even Social Security Administration Office of Chief Actuary admits it.

Family benefits

The term "family" used here differs from the usual definition. We use the term family to mean people receiving benefits that depend on an insured worker's "primary insurance amount." For example, if a husband and wife are both retired and insured for benefits, they will be counted as 2 distinct families in our data. If, on the other hand, the wife is not insured, her benefit will depend on her husband's benefit (and will be about half her husband's benefit) and the couple will be considered as a single family.
My conclusion is that that my DW's maximum family benefit based on her PIA/earnings would be additive and separate to the maximum family benefit calculated on my PIA/earnings.

A cursory review of a DINK case with no disability issues seems to indicate that there is no "marriage penalty" here.

Does your wife plan to draw a "spousal benefit" on her own after you start drawing your own SS after age 70 or does she plan to draw her own SS from her own earnings at that point?

When your wife starts drawing her own SS benefit she would not be receiving a spousal benefit any more IMHO and family benefits would not apply in that no family benefits are being paid.

It seems like at most there would be only a few years that you would need to worry about maximum family benefits if any.

Does this help to clarify your particular situation?

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Old 05-29-2015, 11:02 AM   #4
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Here is what the SSA site says:

"Maximum Family Benefits
If one of your children also qualifies for benefits, there is a limit to the amount we can pay your family. The total depends on your benefit amount and the number of family members who also qualify on your record.
The total varies, but generally the total amount you and your family can receive is about 150 to 180 percent of your full retirement benefit."

If there are no children involved, then you don't need to worry about the maximum family benefit.
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Old 05-29-2015, 11:30 AM   #5
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Until today I missed that there is a family maximum social security ceiling. Since my wife never got in her quarters, she will end up with 50% of my PIA amount. If I add her max amount (waiting to age 67 for her, and my max at 70, the total exceeds the limit by about $160/month.

If I just try to hit the max point, I should begin taking payments 3 or 4 months earlier than age 70. 12 years away, so it's no big deal but still nice to realize the limit is there.
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Old 05-29-2015, 11:56 AM   #6
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Telly -
I know for a fact that MFB *does* apply to children's benefits. (My husband is on SS, and my sons get a small amount each month as minors of a SSA retiree.).

Your situation is a little different, and with the GPO/WEP/Pension stuff... It's different than what Gauss lays out. I suggest you talk to the SSA office directly Depending on your location you might be able to do a walk in, or you might have to make an appt. But they should be able to answer this better than strangers on the internet.

Please let us know what you find out.
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Old 05-29-2015, 02:06 PM   #7
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The Family Maximum Benefit is based on your Primary Insurance amount.

Your Primary Insurance amount is indexed to your wages until age 60 then adjusted by COLA (unless higher earnings after age 60 supplant lower earnings earlier).

Your PIA at age 70 will be higher and the Family Maximum Benefit when you reach age 70 will be higher than today's calculations based on COLA increases. You are not likely to have a family benefit cut.
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Old 05-29-2015, 10:49 PM   #8
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The formula for a spouses benefit at the spouses FRA is generally 50% of the PIA. When DRC's are involved: RS 00615.695 Family Maximum and Auxiliary Benefits (DRC)


DRCs only increase the NH's RIB. The increase does not affect other family benefits. When determining the auxiliary rates, subtract only the NH's PIA. Do not subtract the amount after the DRC increase.

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