Social Security Matters: Understanding the family maximum
Dear Rusty:
My husband passed away when our children were 3 and 5 years old. I received benefits for myself, our two children and my 14-year-old son from a previous relationship. When my 14-year-old son turned 18, the amount he received stopped and was added to ours, keeping the total family amount the same. Then in July of this year my youngest daughter turned 16 so I fell off with that amount now going to my kids. Again, the total family amount stayed the same — $625 each for my daughter and son. The very next month in August, my youngest son turned 18 so of course, he fell off. I called Social Security and the representative said that she couldn’t guarantee that my son’s full amount will go to my daughter. It turns out that none did, decreasing the family amount by $625. My question is why was the family amount reduced when she still has 2 years before she turns 18?
Signed: Confused Survivor
Dear Confused:
I understand your confusion — let me clarify what happened in your situation: Social Security (SS) sets a “Family Maximum” amount, which is the most all eligible family members combined can receive from a worker’s (your husband’s) record. SS uses a rather complex formula to compute the Family Maximum amount, but it comes out to be somewhere between 150 and 180 percent of your husband’s “primary insurance amount” (or “PIA,” what he was entitled to when he passed). The family maximum is in effect whenever there are multiple beneficiaries on a worker’s record.
The benefits you were personally receiving were “child in care” benefits which entitled you, as a surviving spouse with a minor child, to collect 75 percent of the benefit your husband was receiving, or entitled to receive, at his death. Child in care benefits stop when the youngest child reaches 16 years of age. Each of your 3 minor children were also entitled to receive 75 percent of their deceased father’s (or stepfather’s) benefit amount. Minor children can receive 75 percent of the deceased parent’s benefit until they reach 18 years of age (or 19 if still in high school). However, all benefits are subject to the “family maximum.” The total of benefits paid to all survivors of the deceased is limited to that family maximum and, if that amount is reached, all eligible survivors share equally in that family maximum amount. Then as each survivor becomes ineligible due to their age, the remaining survivors each receive a proportional share of the family maximum amount, but that adjustment cannot result in an individual’s benefit being more than they are otherwise entitled to (their maximum individual benefit of 75 percent of your husband’s PIA).
When your oldest son turned 18 and became ineligible, the sum of benefits due all remaining survivors was still more than the family maximum, so the family maximum amount was equally divided among the remaining eligible survivors. Then, when your eligibility for child-in-care benefits ceased when your youngest turned 16, your two remaining minor children each received either a) their equal share of the family maximum, or b) 75 percent of their father’s PIA (their normal entitlement as a surviving minor child). When your youngest son turned 18 and became ineligible, your youngest daughter was then eligible to receive only her full benefit as a minor surviving child (75 percent of your husband’s benefit), which she can continue to receive until she is 18 (or 19 if still in high school). So, as you can see, the family maximum isn’t an amount which is fully available to any survivor, it is an amount that restricts the total amount which can be paid to all when there are multiple eligible survivors.
Please note that at age 60 you are once again eligible for a surviving spouse benefit, which will be based upon 100 percent of the benefit your husband was entitled to at his death, subject, of course, to normal reductions and earnings restrictions for claiming benefits before your full retirement age.
This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website or email us.
