Dazed and Confused

[gonnafileat62]

I'm 60 and probably in a fairly unique situation. I have 4 biological minor children ages 4, 11, 13 and 14. I will be eligible to file for SS 4/9/2016. Spouse is age 39 and working for 2 years. I would like to continue to work as long as I can....hopefully 10 more years......but my job may not last that long. After spending quite a good bit of time reading treads and comments on this forum regarding minor children SS payments and "family maximum" thresholds, I'm truly confused. Using real numbers....I will qualify for $1,716.00 per month at age 62....(75% of the full benefit of $2,276.00 per month). I'm trying to get a feel for filing for retirement at age 62 if I have to vs. waiting till age 66 or even 70, if I can hold out. It appears that having just 2 minor children takes me to the "family maximum".......which is either 150% of $1,716.00/mo. ($2,574.00/mo.) or 175% of $1,716.00/mo. ($3,003.00/mo.) Or, as many posts to a similar forum expressed....my minor children's benefits will be figured as a percentage of my full projected benefit of $2,276.00/mo.....? After considering the pros and cons (and some math!!!) it seems like I would be better off filing at 62.......if we don't consider other retirement assets and just look at the maximum SS payment if my job goes away next year. Would love to hear where I've gone right or wrong with this analysis.

 

[springnr]

SS will pay somewhere between 150 to 180% of your PIA

 

[NYEXPAT]

I am in a similar situation (me 61,wife 33, 9 year old and 1 in the oven). I would get account online at SSA.Gov and look at your current statement to verify the #'s and then build a spreadsheet to plan it out. Basically you will collect the family maximum for the next 13 years (your 4 yo will be 6 when you start collecting and will continue till 19) Once your now 11 yo turns 19, your wife will collect his/her share until the youngest turns 16.

You may wish to consider suspending your payments at age 66-70 (my plan) so that your spouse collects the maximum spousal benefit if you predecease her. I am assuming you are both US citizens.

 

[ImThinkin2019]

Social Security benefit estimate calculations can be confusing, even if you use the SSA website estimates. That's because they tend to underestimate your benefit.

In order to get a more reliable estimate I purchased ESPlanner. Dr. Kotlikoff, one of the principals behind it, is one of if not the most knowledgeable people about Social Security, and this organization has gone to great lengths to be precise about their estimates. You can read about it here http://www.esplanner.com/faq-why-esplanner-projects-higher-benefits-social-security.
The other thing that ESPlanner is good for is scenario testing various benefit dates, retirement dates, etc. And it handles tax calculation which is a major factor in retirement success. I have used numerous calculators and this is the one that I trust.
So if you want more confidence in your calculations, i would suggest you give it a try.

 

[ivinsfan]

We have a couple of interesting SS threads going right now. I see the minor children benefit as something that might very well be on the chopping block in the very near future.

If I were the OP I'd think hard about taking it as soon as he is eligible, or I would be sure to watch like a hawk for any proposed changes so I could get in before they happen. I think dropping benefits for minor children of living retired parents would have very little political fallout.

 

[ImThinkin2019]

We have a couple of interesting SS threads going right now. I see the minor children benefit as something that might very well be on the chopping block in the very near future.

If I were the OP I'd think hard about taking it as soon as he is eligible, or I would be sure to watch like a hawk for any proposed changes so I could get in before they happen. I think dropping benefits for minor children of living retired parents would have very little political fallout.

We will probably be taking it early. With our particular scenario, ESPlanner actually shows a higher living standard if we do. That's probably because we'll deplete our savings less in the early years.

In addition to the higher living standard taking SS early, we also think taking it early will minimize the effect of benefit cuts in the future. For example, if the SS is a smaller portion of our income, a cut would affect us less. And if the cut is a certain% of our benefit, a smaller benefit would mean a lower fraction of our total income.

Taking SS early was not intuitive, and it was ESPlanner which showed us the effect.

 

[NYEXPAT]

There are over 500,000 kids collecting now and as more and more senior's marry younger women ( Do-Overs) the #'s will actually increase. When you look at the LT health benefits/lower HC costs for all parties involved ( proven for women +33 and children) and I imagine for senior men as well, you end up with a healthier young workforce, a population that ages slower and works longer at minimal cost to the system and all that "nookie" which lowers depression rates,stimulates spending,ends poverty,reverses climate change,encourages technology advances (self driving baby carriages with a side car for dear old dad) etc.etc.

 

[RE2Boys]

Keep in mind that the amount between your benefits and the family maximum is divided among the eligible family members. So if have a SAHM and four minors, it could be divided up 5 ways. However, if you do not have your wife apply for benefits, then the same amount is divided up four ways among your minor children. You will need to verify that the total benefit is the same either way it is claimed. In my case, my wife is not receiving any benefits as I'm not sure of eligibility as she works several flexible part time jobs (works when she wants to) but more importantly if she received a benefit, it would be partially taxable. Better to have the dollars go under the kid's name as they are less likely to pay taxes. In my case, the total benefits remained the same.

Started collecting last year at age 63. In my case, my wife has a survivor benefit under my pension plan and since I'm under the WEP rules, her SS benefits under her own work record would always exceed any spousal benefit she may be entitled to (and she is 10 years younger).

There is a lot to consider in deciding to take early benefits from SS. Due to WEP (federal govt retiree), SS is a very small part of my retirement planning so took it early to get the family benefits for four years.

 

[Options]

Social Security benefit estimate calculations can be confusing, even if you use the SSA website estimates. That's because they tend to underestimate your benefit.

In order to get a more reliable estimate I purchased ESPlanner. Dr. Kotlikoff, one of the principals behind it, is one of if not the most knowledgeable people about Social Security, and this organization has gone to great lengths to be precise about their estimates. You can read about it here http://www.esplanner.com/faq-why-esplanner-projects-higher-benefits-social-security.
The other thing that ESPlanner is good for is scenario testing various benefit dates, retirement dates, etc. And it handles tax calculation which is a major factor in retirement success. I have used numerous calculators and this is the one that I trust.
So if you want more confidence in your calculations, i would suggest you give it a try.

+1
I second ESPlanner. It's the most robust calculator I've found. Incidentally, Kotlikoff has stated publicly that almost all of his calculations demonstrate higher lifestyle consumption by dealying SS until 70 (assuming of course you have the financial means to do so).

 

[Katsmeow]

Keep in mind that the amount between your benefits and the family maximum is divided among the eligible family members. So if have a SAHM and four minors, it could be divided up 5 ways. However, if you do not have your wife apply for benefits, then the same amount is divided up four ways among your minor children. You will need to verify that the total benefit is the same either way it is claimed.

When DH retired he took SS immediately (he was about 62 1/2). We had 2 minor children. In my case, I did not apply for benefits since I was still working.

When one of the minor children turned 18 (he had already graduated high school so lost benefits immediately) our other child got an immediate raise since the benefits had been capped due to the family maximum. Note that the other child's benefits didn't double, but they did go up.

There is no question we felt that for us doing it this way was way more beneficial than having DH wait to apply for SS. Our youngest child is aging out of benefits in a couple of month.

(In our case, DH will not suspend benefits at that point since I won't be collecting on his record as my own benefits equal or exceed his).

+1
I second ESPlanner. It's the most robust calculator I've found. Incidentally, Kotlikoff has stated publicly that almost all of his calculations demonstrate higher lifestyle consumption by dealying SS until 70 (assuming of course you have the financial means to do so).

One of the exceptions to this for some will be taking benefits earlier if you have minor children. It is easy to say that everyone needs to wait until 70, but in our case it was clear that for DH to wait until 70 would be just throwing money away. Of course, I agree that it is important for the original poster -- and everyone else in this situation -- to look at how it plays out for your own situation.

 

[wolf]

I'm 60 and probably in a fairly unique situation. I have 4 biological minor children ages 4, 11, 13 and 14. I will be eligible to file for SS 4/9/2016. Spouse is age 39 and working for 2 years. I would like to continue to work as long as I can....hopefully 10 more years......but my job may not last that long. After spending quite a good bit of time reading treads and comments on this forum regarding minor children SS payments and "family maximum" thresholds, I'm truly confused. Using real numbers....I will qualify for $1,716.00 per month at age 62....(75% of the full benefit of $2,276.00 per month). I'm trying to get a feel for filing for retirement at age 62 if I have to vs. waiting till age 66 or even 70, if I can hold out. It appears that having just 2 minor children takes me to the "family maximum".......which is either 150% of $1,716.00/mo. ($2,574.00/mo.) or 175% of $1,716.00/mo. ($3,003.00/mo.) Or, as many posts to a similar forum expressed....my minor children's benefits will be figured as a percentage of my full projected benefit of $2,276.00/mo.....? After considering the pros and cons (and some math!!!) it seems like I would be better off filing at 62.......if we don't consider other retirement assets and just look at the maximum SS payment if my job goes away next year. Would love to hear where I've gone right or wrong with this analysis.

Was in same situation. Took SS at 62. Make it simple. Arrange an
appointment with SS office. Sit down for an hour or so, and have your
questions answered.

Also, you can spend a lot of time with the little ones. School field trips
etc. Really can be a lot of fun.

Also, in the future, as some of your children, reach 18, you can always
work part time, so your SS is not impacted.

 

[NYEXPAT]

In my case it will amount to about 2k a month for the kids. We plan to dump a portion of it into a 529 and let the guvmint fund their college.

 

[Katsmeow]

In my case it will amount to about 2k a month for the kids. We plan to dump a portion of it into a 529 and let the guvmint fund their college.

I'm not sure if you can do that. There is a specific way that the payee account has to be titled for the SS money. You can't just mix it with your money. You can spend on things for the benefit of the child of course. Also, when the child turns 18 any amount that hasn't been spent is supposed to be returned to SS and then they will send it directly to the now adult child. I'm not sure how that would work with a 529 (we don't have a 529). So before you do this you need to look carefully at the rules and maybe talk to SS about it.

 

[Htown Harry]

I'm not sure if you can do that. There is a specific way that the payee account has to be titled for the SS money. You can't just mix it with your money. You can spend on things for the benefit of the child of course. Also, when the child turns 18 any amount that hasn't been spent is supposed to be returned to SS and then they will send it directly to the now adult child. I'm not sure how that would work with a 529 (we don't have a 529). So before you do this you need to look carefully at the rules and maybe talk to SS about it.

Well, %$#*&. That's exactly what we've been doing for the past two years since DW started drawing SSDI. The monthly SSA amount > direct deposit to a savings account in my name > monthly auto-contribution to a 529 in my name with DD as the beneficiary. Every penny has been saved.

I never would have imagined that the principal of money being fungible doesn't apply to the child benefit SS regulations. And last I checked, benefit and beneficiary are variations on the same word.

But this article confirms what Kat is saying:
Social Security benefits for a child - Newsday

And, good grief, SSA has multiple guidelines on handling "conserved benefits".
https://secure.ssa.gov/poms.nsf/lnx/0200603055
https://secure.ssa.gov/poms.nsf/lnx/0200605068

I'll be your guinea pig on how this works out, gonnafile. DD turns 18 this week and just received her last payment. I now look forward to receiving some sort of final accounting request that will put me in bureaucratic purgatory for a while.

Working in my favor should be the fact that the 529 funds are invested in a stable value fund. Logically (I know, I know..) that should meet the spirit of this SSA policy:

SSA recommends that conserved funds over $500 be held in U.S. savings bonds or in an interest yielding checking or savings account that is insured under either federal or state law. Since payees are investing the beneficiary's funds, the rules governing conserved funds are very conservative to avoid any loss to the beneficiary. The investment must clearly show that the beneficiary is the owner and any interest earned belongs to the beneficiary.

 

[wolf]

I'm not sure if you can do that. There is a specific way that the payee account has to be titled for the SS money. You can't just mix it with your money. You can spend on things for the benefit of the child of course. Also, when the child turns 18 any amount that hasn't been spent is supposed to be returned to SS and then they will send it directly to the now adult child. I'm not sure how that would work with a 529 (we don't have a 529). So before you do this you need to look carefully at the rules and maybe talk to SS about it.

Don't quote me on this. Using my foggy memory. But in my case,
every year, I would get a letter from SS/govt. Basically, says, did you
spend all of the SS benefit money on the child. ie. room/board/medical,
etc. If you your answer is yes, you just mark the yes box and sign and
date, and return the letter.

If you have leftover money, you are suppose to put it in a savings account or such and and write down how much..

Just a form letter, don't know if anyone really checks it....now days,
very easy to spend entire amount.....then you just use your other money to fund 529 or what ever....