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By AMAC Certified Social Security Advisor Russell Gloor, Association of Mature American Citizens     

Dear Rusty: I was born in 1956 and my wife in 1961. I’ve got 45 years of SSA earnings and I will have income in 2021. We have four minor children, the youngest born in 2012. When is the best time for us to apply for benefits? Are we eligible for family benefits? My statement infers that we are. Signed: Older Dad

Dear Older Dad: Born in 1956, your full retirement age (FRA) for Social Security purposes is 66 years and 4 months. If you claim your SS benefit at any time before your FRA, it will be permanently reduced. If, for example, you claimed your SS benefits now, the amount would be permanently cut by about 14%. Your wife’s FRA is 67 and, similarly, she will receive a reduced SS retirement or SS spousal benefit if taken any time before her FRA.

Your wife isn’t normally eligible for benefits until she is 62 years old, but if she is providing full time childcare to your minor children, she is eligible for spouse benefits sooner. Child-in-care spouse benefits are available at any age for your wife if she is providing care for at least one of your minor children under the age of 16. You must be collecting your own SS benefit for your wife to be eligible for this.

Once you start collecting your Social Security, your minor children will become eligible for benefits also. Minor child benefits are available to any child under the age of 18, or 19 if still in high school. All your children who qualify under that definition would be eligible for benefits based upon your Social Security earnings record. But, because of Social Security’s Family Maximum, the amount each child receives would be less than half of your FRA benefit amount.

The Family Maximum amount is different for everyone because it is computed using each person’s Primary Insurance Amount, or “PIA,” which is the amount you are entitled to at your FRA. The Family Maximum normally computes to somewhere between 150% and 180% of the primary beneficiary’s PIA, and that amount is shared by all those collecting. So, in your family’s case, your PIA amount is first deducted from your Family Maximum amount and the remaining 50% to 80% is equally apportioned among all those collecting benefits on your record (including your wife if she receives child-in-care benefits). If all four of your children are minors and your wife is collecting child-in-care benefits, those five individuals would each receive an equal portion of the remaining family maximum amount after your PIA is deducted.

It’s probable that your family would get the entire family maximum amount, for as long as your wife and minor children are eligible for benefits. But remember that claiming your own benefit before your full retirement age results in a permanent reduction to the benefit you will receive for the rest of your life. So, you should evaluate which option is financially better considering your life expectancy – claiming now and getting the full Family Maximum amount in these earlier years or waiting longer (even up to age 70) to receive a higher personal benefit for the rest of your life. You should also consider that if you die first, your wife’s survivor benefit will be based upon the amount you are receiving at your death, so the age at which you claim also affects your wife’s benefit as your widow.

Finally, if you claim before you have reached your full retirement age, Social Security’s earnings limit will apply until you reach your FRA. If you work and exceed the limit ($18,960 for 2021), Social Security may withhold your benefits for several months and your dependents won’t receive their benefits while yours are withheld. Note too that your earnings limit will go up by about 2.5 times during the year you attain FRA.

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