Family Maximum Benefit

A reader from Missouri asks about factoring the family maximum benefit into the decision of when to start taking Social Security. 

“How do you factor the family maximum benefit into your decision about when to take Social Security? My husband and I will have similar Social Security benefits. The Survivors Benefits part of the statement says total family benefits cannot be more than $4,961. Would this apply if we were both alive as well? If so, it seems we would not want to wait past 65. I’m guessing if my benefit amounts increase, the family benefit would also be slightly increased, but this is just a guess.” 

From your question, you have a little misunderstanding about the family maximum benefit. This misunderstanding is not uncommon when people learn about this ‘thing’ called the family maximum. I wish they would call it something else because it’s easy to draw the wrong conclusion from that name. It sounds like there is some arbitrary or calculated limit to what Social Security will pay to any ‘family.’  

You are married, are part of a couple, and make up a family. However, that’s not the family they’re talking about. They’re talking about a maximum amount that can be paid on any one person’s record when other family members – or auxiliary beneficiaries – collect on that record.  

If you and your spouse each have your own benefits (which you mentioned were roughly the same amount), the family maximum will never apply to you. The family maximum would only start to apply if you were to be claiming on your husband’s record, or he on yours, as a spouse. Even then, you wouldn’t be limited since the formula used to calculate the family maximum restricts the amount paid on your earnings record to between 150% and 188% of your Primary Insurance Amount (PIA).  

First, because you and your spouse have similar Social Security benefits, there would be no reason for one to claim a spousal benefit on the other. But even if you did, the spousal benefit is calculated as 50% of the worker’s benefit. So, 100% is for the worker’s benefit, and 50% is for the spousal benefit, totaling 150% -- which is the lower limit of the family maximum.  

People always ask, “What if I’ve delayed claiming my benefit? What if I’ve passed my Full Retirement Age (FRA), and my benefit is bigger than my PIA?” That doesn’t matter. Your benefit is always entered into the family maximum formula at its PIA value. Social Security does not factor in delayed retirement credits in its calculations. Nor do you get a reduction in the computation for claiming early. 

The family maximum starts to apply when you have more than one beneficiary claiming. Typically, that would be you, your spouse, and maybe a minor child-in-care, a dependent parent, or an adult disabled child. As the number of auxiliary beneficiaries increases, some beneficiaries might receive partial benefits according to a complex formula.  

However, there is no maximum for a couple that doesn’t have any of those connections trying to claim on their records. Also, remember when you look at your statement and see those projected benefits growing as you delay past your FRA – illustrating the effect of delayed retirement credits -- those credits don’t contribute to your family maximum. Your basic PIA (not your enhanced benefit) is the first component: the 100% of that 150-188% limit. 

The family maximum can, at times, influence a claiming strategy, but those times are when you have, say, an adult disabled child or other dependent that would qualify for benefits were you to claim. That fact might influence your decision to claim earlier even though it means taking a reduction in your benefit, as claiming would open up the door to the spousal and auxiliary benefits. The family maximum might alter how much is being collected, and you would want to consider that when weighing the option of claiming early. When calculating the benefit of claiming early versus waiting until later, you want to be sensitive to the family maximum.  

So, yes, the family maximum can come up in claiming discussions, but not when you have two spouses with equivalent Social Security benefits. I can’t imagine a case where the family maximum would affect you. Only if you have auxiliary beneficiaries would it even matter. It’s also easier to stay under the family maximum than you might think because Social Security only uses your PIA and doesn’t add any delayed retirement credits into the calculation. 

I hope I have calmed your concerns. Your description of your circumstances doesn’t sound like you should be worried about the family maximum.