Hi Larry,
I am almost 60 (12/25/61) as of this writing with A 10 year old child and a 12 year old adopted child.
I still earn 100000/yr from work however I contribute the max to 401k. I wanted to claim SS at 62 for the children.
Do I have to claim for myself also or can I claim just for them?
I will continue at my job for at least 5 years after turning 62.
I know that SS will be reduced because of my income.
When or how do I receive the benefits that were reduced because of work?
Also, as I continue to work, Am I increasing SS from higher wage years?

My wife still works, is 8 years younger than me, makes over 175,000

Thanks in advance.
Mike

Hi Mike. Yes. Child benefits can only be paid to children whose parent is either a) drawing Social Security retirement or disability benefits, or b) is deceased. Furthermore, the Social Security earnings test applies not only to the worker's benefits, but also to any auxiliary (e.g. spouse's, child's) benefits payable on the worker's account. Therefore, there is no way that your children could be paid benefits from your record for any months that your benefits are withheld due to the earnings test.

Until the year in which you reach full retirement age (FRA), Social Security would need to withhold $1 of the benefits payable on your record for every $2 that you earn in excess of the earnings test exempt amount. The exempt amount in 2021 is $18,960, and it will increase to $19,560 in 2022.

Here's an example. Let's say Bob reaches age 62 on January 1 2022 and he claims retirement benefits that month. Bob's primary insurance amount (PIA), which is equal to the rate he'd be due if he waited until FRA to start drawing, is $2000. However, Bob's benefit rate is reduced for age to $1425. Bob has 2 children who are eligible for benefits on his account. Their benefit rates are calculated based on 50% of Bob's PIA, which in this case results in a benefit rate of $1000 for each child (i.e. $2000/2). However, there is a family maximum benefit (FMB) amount that limits the total amount of auxiliary benefits that can be paid on Bob's account to no more than $1500. That reduces the amount that can potentially be paid each child to $750 per month.

So, in Bob's case a total of $2925 (i.e. $1425 + $750 + $750) can potentially be paid out per month on his account. But, Bob is still working and he's earning well over the earnings test exempt amount. Bob expects to earn $100,000 in 2022, which exceeds the earnings test exempt amount by $80,440. As a result, Social Security would need to withhold $40,220 of the benefits payable on Bob's account before any benefits could be paid to Bob or his children. And, since the total amount potentially payable on Bob's account before considering the earnings test is only $35,100 (i.e. $2925 x 12), no benefits could be paid to either Bob or his children in 2022.

As the example above illustrates, whether or not you or your children could actually be paid any benefits prior to your FRA depends on your yearly earnings and your PIA.

Benefits withheld due to the earnings test are not repaid to the worker or their children at any time in the future. However, the worker's monthly benefit rate is adjusted once they reach FRA to remove any age reduction applied for months that the worker wasn't paid due to the earnings test. So, in the case of our example with Bob, if the earnings test resulted in no benefits being paid to Bob prior to his FRA, his benefit rate would be increased effective with his FRA to his unreduced rate of $2000. Neither Bob nor his children would be repaid any of the benefits that were withheld prior to the month that Bob reached FRA, though.

And, finally, yes your future earnings could potentially increase your monthly benefit rate regardless of when you claim benefits. Social Security retirement benefits are based on an average of a person's highest 35 years of Social Security covered wage-indexed earnings, so a person can continue to increase their benefit rate for as long as they keep working as long as they earn more in a year than they did in one of their previous 35 highest earnings years.

It sounds like you should strongly consider using our software (https://maximizemysocialsecurity.com/purchase) to fully analyze all of the options available to you in order to determine your best strategy for maximizing your benefits.

Best, Jerry