Earnings Test and Child-in-Care

Someone from Indiana asks whether her husband’s early Social Security filing while still working would suspend her child-in-care benefits, and whether his benefit would be recalculated to his Full Retirement Age amount once the earnings limit no longer applies.

"My husband will soon turn 64 and earns over $120,000 a year. He wants to work until his Full Retirement Age (FRA) at 67, and maybe longer. We have a disabled adult child. I will file for child-in-care benefits when my husband files. I am 5 years younger than he is, and I am the caretaker of our disabled daughter. I would receive 50% of his FRA amount, and my daughter would receive 50% of his FRA amount. If he files at 64 and continues working, earning more than $120,000, Social Security would withhold part of his benefits under the earnings test, possibly down to $0. Would my child-in-care benefits stop if his benefits are withheld down to $0? We don't "need" the Social Security money right now, but we also don't want to miss out on money we could be receiving and putting aside for our daughter's future. Also, if his benefits are withheld until age 67 (when the earnings test is no longer in effect), will Social Security recalculate his retirement benefit at the time of FRA?"

First of all, I need to correct one thing you seem to be thinking: that both you and your daughter will each receive 50% of your husband’s Full Retirement Age (FRA) benefit. That’s not how it works because of the ‘family maximum.’

The family maximum limits total benefits paid on one worker’s record to between 150% and 183% of the worker’s FRA benefit. If the worker claims 100%, the remaining amount is between 50% and 83%. There’s a formula to determine where you fall within that extra 50-83%, but essentially, you and your daughter will share the ‘up to 83%.’ It won’t be 50% plus 50%, or 100% more than your husband’s benefit.

Secondly, the earnings test has some interesting features. To recap for everyone: there’s one worker with a Social Security benefit (the husband in your case), and on that record, two additional auxiliary beneficiaries will file for benefits.

You will file as a spousal beneficiary. In your case, it’s called a child-in-care benefit. The key difference is that a child-in-care benefit removes the normal early-claiming reduction you would receive as the spouse if you were claiming before your own FRA and were caring for the worker’s child. This could be either a child under 16 or an adult disabled child. In short, as a child-in-care beneficiary, you can collect a spousal benefit early without the early-claiming reduction.

Then your child can claim if they are under 18 (or 19 if they are still in high school) or if they’re disabled before age 22. That’s the case here: we’re addressing a disabled adult child, so they qualify as a child for Social Security benefits.

When the earnings record is applied to the worker (in this case, your husband, who earns $120,000 a year), it’s applied in a trickle-down manner to all beneficiaries claiming benefits on that same record. In other words, his earnings not only affect his benefit but can also affect the spousal and child benefits claimed on that same record.

You asked whether you and your daughter would still receive any benefits if your husband’s benefit went to zero. Social Security will calculate the offset. In this case, the offset will be very large. In 2026, if you’re earning more than roughly $25,000, Social Security will reduce your retirement benefit by one dollar for every two dollars earned above that limit. Your husband is essentially $100,000 above that amount, so the earnings limit offset will be about $50,000. Social Security will apply that $50,000 by reducing benefits that would otherwise be paid to all three of you: your husband, you, and your daughter.

You didn’t share the numbers, but depending on the size of the Social Security benefits, it’s likely that you could see all of the Social Security benefits for all three of you eliminated due to the earnings test. But again, we don’t have the actual benefit numbers to say how much would disappear. If the benefit is large enough, there’s a possibility that a little bit would be left over.

I suspect that if your husband continued working and claimed his Social Security benefit before his FRA, there would be little to no benefit for any of you. It’s possible there could be a small amount, but it’s probably not worth the permanent reduction in his benefit that would result from claiming early.

Social Security would correct – or recalculate – his benefit when he reached his FRA, but the lost auxiliary benefits may never be recovered. You’d have to look at the numbers to know for sure. However, if he’s making $120,000, I suspect he has a fairly healthy Social Security benefit. First, you would figure out the total to be paid to everybody. If it was greater than $50,000 for the year, any amount above that might be available, but it will likely be rather small, even if your husband has a pretty decent-sized Social Security benefit.

Here’s another issue to consider: when your husband reaches his FRA and Social Security recalculates the impact of the lost benefits, will they make him whole for the lost benefits you and your child would have received under the child-in-care benefits?

Sometimes they do, and sometimes they don’t. Whether Social Security adjusts auxiliary benefits depends on specific circumstances. If benefits were lost due to your earnings, they’re never recovered. But if benefits were lost due to the wage earner’s earnings, Social Security will increase his benefit amount when it adjusts at his FRA. That, in turn, will help you and your daughter as well.

One more clarification: One often hears, “Oh, but if you lose your benefits because of the earnings test, they’ll give them back to you.” That makes it sound as if Social Security will pay out everything it withheld in a single check once the wage earner reaches FRA. Let me explain how that actually works.

The earnings test applies only if you’re under your FRA and collecting Social Security benefits. When you reach your FRA, if Social Security reduced or eliminated your benefit because of the earnings test, they will look back and calculate how many months' worth of benefits they withheld from you. Then they’ll recalculate your benefit moving forward as if you had claimed that many months later than you actually did. But they don’t give it back to you as a lump sum.

They ‘pretend’ you claimed ‘x’ months later than you actually did, which slightly increases your benefit for the rest of your life. The breakeven point is usually in your eighties, so if you live long enough, you’ll “get it back,” though not all at once.

Let’s look at a more concrete example. You said your husband might claim at 64. That’s three years before his FRA, when the earnings test ends. Hypothetically, if he lost half his benefits during that 3-year period, Social Security would have withheld the equivalent of 18 months (half of 36 months). It would then recalculate his benefit as if he had claimed at 65½ instead of 64.

Social Security will make up those 18 months, increasing his benefit by the equivalent of 10% for the rest of his life. It will take a long time to reach breakeven, and he will be made whole only if he lives long enough.

You can only really make a decision about what action to take based on the actual numbers, but this provides the framework for that calculation.