Question: My husband is 61 (I’m 41) and we have two young children. I know there is a family limit to how much he can collect in Social Security. If he files and suspends at 62, will we get a higher amount for the kids until he turns 70? Or should he just file ASAP because of those child benefits?
Answer: You have two strategies to consider.
Strategy A is what I call Start-Stop-Start. Under this strategy, your husband starts collecting either at 62, or sometime after reaching 62, but before reaching full retirement age. This enables your children to collect child benefits and you to collect a child-in-care spousal benefit until they both are age 16. Or, if they are disabled, and became so before age 22, you can collect a child-in-care spousal benefit on an ongoing basis, and they can collect child benefits on an ongoing basis.
But there is a family benefit maximum equal to between 150 percent to 187 percent of your husband’s full retirement benefit depending on the size of your husband’s full retirement benefit. Even though your husband will be collecting permanently reduced retirement benefits, 100 percent of his own retirement benefit will be counted against the family benefit maximum, leaving, for your children and yourself, only 50 to 87 percent of his full retirement benefit.
Since the child benefit for one child is 50 percent of the full retirement benefit, as is the child-in-care spousal benefit, if both your children collect, as well as you, the 50 to 87 percent of your husband’s full retirement benefit will be split evenly three ways. If you don’t try to collect, the two children will collect the 50 to 87 percent, but split evenly two ways. In short, given the family benefit maximum, it doesn’t help to have more than two of the three of you try to collect. So you might just have the children collect and when your oldest no longer is eligible, you can join your youngest if he/she is, at that point, still under 16 or disabled. Your children, if they aren’t disabled, can collect until they reach age 18 or age 19 if they are still in elementary or secondary school.
The final aspect of strategy A is that your husband would suspend his retirement benefit upon reaching full retirement age and start it up again at age 70. His suspension of benefits won’t affect your children’s or your eligibility to collect benefits on his work record, so don’t worry about that. At 70, your husband’s retirement benefit will restart at a 32 percent higher level than the reduced (due to taking benefits early) level it was at when he suspended it.
Strategy B is what I call File-and-Suspend. Here your husband waits until full retirement age to file for his retirement benefit. But upon doing so, he immediately suspends his retirement benefit and restarts it at 70 when it begins at a level that is as large as possible. Once your husband files for his retirement benefit, and regardless of whether he suspends his retirement benefit, your children and you can start collecting child and child-in-care spousal benefits on his work record. However, the family benefit maximum will still limit what can be collected.
Which is best, Strategy A or Strategy B? It depends on both of your earnings histories, your maximum ages of life, your future projected earnings, your children’s ages, their disability status and the discount rate you apply in valuing your future benefits. In short, there are a lot of factors. You need an extremely precise Social Security lifetime benefit maximization program to tell you which strategy can be expected to produce the highest lifetime benefits.
Now to answer your specific question. First, your husband can’t file and suspend at 62. He needs to wait until he reaches full retirement age to file and suspend. Second, once he files for his retirement benefit, your kids and you can, subject to the family benefit maximum, collect on your husband’s work record. When that option ends doesn’t depend on whether or not your husband has reached age 70. However, if he files prior to full retirement age and continues to work, Social Security has an earnings test that could reduce or preclude the payment of benefits to your family. Finally, whether he should file before reaching full retirement age is a question that only the right software program can help you address.
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