Q: I am 67 years old. I took my Social Security at age 66. I have a 17-year-old son, a 14-year-old daughter and a 57-year-old wife. All three of them are getting benefits as dependents on my account. The Social Security office told me that my kids will keep getting checks until age 19. And my wife will get Social Security until the youngest one turns 19. But by then, she will be 62, so she will be able to get regular wife's benefits at that point. They also said the total amount we are getting now will never change. Is all of that true?
A: No, it's not true. You either misunderstood what the Social Security people were telling you or got some bum advice. I'm going to assume the former because the rules involving benefits paid to a family can get quite messy and are not easy to follow. But I will try to explain it as simply as possible.
I'll start with a couple of basic Social Security principles. As someone who has worked and paid taxes, you obviously are due your retirement benefit. Your children qualify for benefits until they reach age 18 (not 19). If they are still in high school on their 18th birthday, their benefits can continue until they graduate or turn 19, whichever comes first.
Your wife qualifies for what are known as "mother's benefits" until the youngest child turns 16. Based on what you told me, she will be 59 when that happens. At that point, her mother's benefits will stop. But when she turns 62, she then can file for regular dependent wife's benefits on your record.
Now let's look at how everyone's benefits will play out as the years go along. You didn't tell me what you are getting. So to help explain, let's say your full age 66 retirement benefit is $2,000 per month.
Yours is the easy one. You waited until 66 to take your Social Security. So you should be getting your full retirement benefit of $2,000 per month. You will get that for the rest of your life (with annual cost-of-living increases, of course).
Technically, each of your dependents is due 50 percent of your retirement rate. So normally, each of them would get $1,000 per month. That would come out to a total of $5,000 per month payable to you and your family.
But the law sets a maximum level that can be paid to a family. That family maximum rate is usually 175 percent of your retirement amount. Based on a variety of circumstances, it could come out to slightly more or less than that. But to keep this explanation simple, let's assume that 175 percent of your retirement rate is the most that can be paid to you and your family.
That means the maximum dollar amount that can be paid to all of you is $3,500 per month ($2,000 times 1.75 equals $3,500). Your own retirement benefit is never impacted by the maximum family rate. So out of that $3,500, you always will get your retirement payment of $2,000 per month. That leaves $1,500 per month to be divided among your wife and two children. So right now, each should be getting about $500 per month.
When your son turns 18 in another year, he will be dropped from the rolls. That leaves two dependents (your wife and daughter) to split $1,500, so each will get $750 per month. Your family still is getting the family maximum total of $3,500 monthly.
When your daughter turns 16 in two years, your wife will lose her "mother's benefits," and she'll be taken off the rolls. (Again, your wife will be 59 at the time, so she's not old enough to qualify for regular wife's benefits.) Now the family maximum rate is no longer an issue. At this point, you will have only one dependent (your daughter) getting benefits. And the most she can get is 50 percent of your rate, meaning she will get $1,000 per month. So once your daughter is the only dependent on your account, you will be getting total monthly benefits of $3,000 ($2,000 for you and $1,000 for her).
And in about four years, when your daughter turns 18, she no longer will be eligible for dependent child's benefits. So then we will be down to just you — getting your $2,000-per-month retirement check.
And finally, about five years from now, when your wife turns 62, she can come back on the rolls, getting a dependent wife's benefit on your account. At 62, she'd get a reduced benefit, equal to about 30 percent of your rate, or about $600 per month. Your wife could choose to wait until 66 to apply for wife's benefits, at which point she'd get half of your benefit, or $1,000 monthly.
And we could take this one more step. Someday, obviously, you are going to die. And assuming you die before your wife does, she will then begin getting widow's benefits on your account. And her widow's rate depends only on how old she is when that happens. Assuming she is 66 or older when you die, she will get 100 percent of your benefit as a monthly widow's payment.