Social Security - Dependent Benefits Example
Husband, age 63, Wife, age 46, have two kids - ages 13 and 11. Husband still works and wants to retire soon. The family’s income will decline once husband does retire. His primary insurance amount (PIA) at his Full Retirement Age at 66 is $2,000 per month. He will be receiving a nice pension from his company but would like the added Social Security income even though he knows early filing will reduce his benefit payments.
Q: Can the two kids file for dependent benefits once Husband retires? If so, how much?
To be eligible for Social Security benefits, a child must be unmarried and under 18, or under 19 if still a full-time high school student. Disabled adults over 18 are also eligible for benefits as long as the total disability began before 22. The child can be a client’s natural child, legally adopted child, stepchild and, in some cases, a grandchild if the child’s parents are deceased or disabled and the child is your dependent.
Q: What amount will the dependent receive?
The child’s benefit is based on 50% of the parent’s primary insurance amount at full retirement age. Even if the parent claims reduced-retirement benefits early or larger benefits by delaying his full retirement age, the child’s benefit is still based on half of the parent’s full retirement benefit.
Q: Does Husband have to receive benefits before his kids can file for dependent benefits?
Yes. This creates a dilemma for the retiring father – does he hold off on receiving benefits so his own retirement amount grows, or does he file early and trigger dependent benefits for his children (and possibly his spouse) by commencing benefits for himself?
Q: Is Wife eligible for dependent benefits also?
Yes. Regardless of her age, if she is caring for the worker’s dependent children, she is entitled to dependent benefits as well.
Q: Is there a maximum that a family can receive from one worker’s earnings record?
Yes. But the total amount paid on a worker’s record is capped at the family maximum, which falls somewhere between 150% and 180% of a worker’s full retirement benefit. If total family benefits exceed the prescribed family maximum, each dependent's benefit is reduced proportionately, but the worker’s own benefit is not affected.
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