Social Security

Dear Liz: I just turned 62 and I have 3 children, ages 11, 13 and 15. I understand that starting Social Security now means my benefit is permanently reduced. Should I delay or take it now, since my children could get benefits?

Answer: The so-called “child benefit” complicates the math that usually favors delaying the start of Social Security.

Each of your children could get a monthly check equal to half your benefit because they’re under 18 and presumably unmarried. (Unmarried children who are under 19 but still in high school, or 18 or older with a disability that began before age 22, also can qualify.) There’s a family maximum that limits the total that can be paid to any household, which ranges from 150% to 180% of the parent’s full benefit amount.

Your kids can’t receive these benefits unless you’re receiving yours, however. Applying before your own full retirement age, which is 66 years and 8 months, permanently shrinks your check and subjects the family benefits to the earnings test if you’re still working. The earnings test reduces your benefit by $1 for every $2 you make over a certain limit, which this year is $18,240. The earnings test goes away after you reach full retirement age.

If you’re married, your claiming strategy also needs to consider your spouse. A reduced benefit could affect the survivor benefit one of you will have to live on when the other dies.

With so many variables to consider, you’d be smart to consult a Social Security claiming strategy site such as MaximizeMySocialSecurity or Social Security Solutions. These services aren’t free, but an investment of $20 to $50 could result in thousands more over your lifetime.

Dear Liz: I retired and started collecting Social Security at 62. My husband is currently 68 and plans to retire next year. I called Social Security before I retired and they told me that I could collect Social Security at 62 and when my husband retired, I could collect my own Social Security or half of my husband’s, whichever was greater. Is this accurate? I should have done more research before taking my benefit as I’m not sure this is true.

Answer: It’s true. There’s a substantial penalty for starting early, and most people are stuck with a permanently reduced payment, but your situation is one of the potential exceptions.

You weren’t eligible for a spousal benefit at 62 because your husband hadn’t started his benefit. When your husband does start, the spousal benefit will be half of what he would have received had he applied at his full retirement age of 66. If you’re younger than your own full retirement age, the spousal benefit will be reduced to reflect the early start. If all those calculations result in an amount that’s more than what you collect, you’ll get the larger amount.

By waiting to start benefits, your husband gets delayed retirement credits equal to 8% for each year he has waited past his full retirement age. Spousal benefits don’t qualify to share those credits, but survivor benefits do. When one of you dies, the smaller of the two checks you receive as a couple goes away and the survivor receives the larger of the two benefits. The survivor’s check will be larger because your husband waited to apply.

This is why it’s so important for the larger earner in a married couple to delay filing for as long as possible. The higher earner’s benefit determines what the survivor will have to live on, often for years and sometimes for decades, after the first spouse dies.