Chris Stein, CFP®
Child-In-Care Spousal Benefits: Can I Still Work?
A reader from Florida would like to know if she can still work if she files for child-in-care spousal benefits.
“If I file for child-in-care spousal benefits, can I still work? If so, is there a limit to my income each year before they take some of my benefits away?”
First of all, child-in-care spousal benefits come into play when someone is below the normal age of filing for spousal benefits (which is age 62) but is caring for the child of someone who has retired – or who has at least claimed Social Security retirement benefits. The ‘age 62’ requirement to receive spousal benefits is essentially waived, so someone younger than that can file. These child-in-care spousal benefits remain in effect until the child turns 16 years of age.
So that’s what this question is about. But, your actual question is, “Can I still work?”
Yes, you can still work, But, you will be subject to the retirement earnings test.
The retirement earnings test defines the maximum you can earn before Social Security starts reducing your benefits. For 2020, you can make up to $18,240 a year. That limit goes up every year with inflation. (I’ve never seen it go down, but in these strange times, if we have negative inflation we could see some strange things.)
So, if your earnings exceed that, the Social Security Administration is going to reduce your benefits by $1 for every $2 you earn in excess.
The good news is that your earnings won’t affect your spouse, who has filed for retirement benefits. To help people visualize the relationship between the different benefits, I always like to describe it as ‘upstream’ and ‘downstream.’ The impact of the earnings test flows downstream, but not up.
When you’re claiming ‘under’ someone’s work record, you are downstream of them. You can be harmed by an earnings test that they’re subject to – because the impact flows downstream. But, you and your earnings won’t flow upstream and damage them. Your earnings can affect the benefits that you’re receiving, but not anyone upstream of you or to the side of you.
The child in this scenario – your child – is collecting benefits directly off your spouse’s retirement benefit. Your husband has clearly filed to open up the door for the child benefit and the child-in-care benefit.
So, the only thing that could be put at risk if you have earnings above the $18,240 limit would be your child-in-care spousal benefit alone. It won’t jeopardize your child’s benefit, and it won’t jeopardize your husband’s retirement benefit.
However, the opposite is not true. If your husband is still working and is subject to the earnings test, his earnings can affect his benefits and all the benefits below his. In this case, that would mean the child benefit and the child-in-care spousal benefit. Keep that in mind.
So, the quick answer? Yes, you can work, but there is an income limit of $18,240. Stay below that, and you’ll stay completely protected. Go above that, and you’re going to give up $1 of benefits for every $2 of earnings above the $18,240 figure.