September 6, 2017 | by Chris Stein, CFP®, Finance Instructor at Colorado State University
Question on Family Maximum

We received an interesting email question this week that covers a couple confusing elements of the Social Security family maximum and the child in care benefit, and I felt it was perfect to answer via this blog so others could benefit.  The question is:

“I’ll be 62 in September and my spouse will be 56 in September also. We have a 12 year old son. We’re both retired. My wife was in law enforcement and is receiving a pension. I’ve signed up for Social Security to begin in October after I turn 62. My PIA is \$1397. My benefit at 62 is \$987. Our family maximum is \$2220. They tell me the benefit for my son would be \$662 and child in care benefit for my spouse would be reduced to \$234 because of the family maximum. They are subtracting my benefit at 66 (\$1324) from my family’s benefit of \$2220 to get the combined benefit of \$896 for my son and wife. The benefits would be \$448 each till my son is 16 then he would get the \$662. Is this correct? I haven’t seen any articles that say you subtract your PIA from your family benefit to get you maximum benefits for spouse and child. I thought both benefits would be half of my PIA considering only two benefits are being paid.”

This question has a lot of complex parts to it. Here are some of the key points:

1. The Social Security Administration uses a convoluted formula to calculate the Family Maximum. We won’t go into that formula here but the maximum is usually 150-188% of the worker’s PIA.
2. The SSA does calculate the maximum to be paid to spouse and child by subtracting the worker’s PIA from the Family Maximum.
3. Any reduction due to the Family Maximum is applied only to auxiliary benefits (spousal and child). The worker’s benefit is never reduced.
4. In this case it appears that the SSA has properly calculated the benefits to which his family is entitled.

If you’d like to see the SSA’s explanation, you can use this link:  https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html