I've just been diagnosed with a terminal illness. I probably will be dead in 2-5 years. The rest of my situation is as follows:
I'm currently 51, my wife is 45 and our child is 6. My question isn't so much about "maximizing" MY social security (I'll be dead long before I collect anything) as much as a basic question about the income limits, for the situation where I'm dead and my wife can or cannot claim the survivor's benefit for our child and as the caretaker of my child under 16 years old. I hope I don't need software to figure that out - definitively. I know better than to rely on anything social security says.
My statement says my child is due $1727/month and that my spouse, if caring for my child, is due for another $1727/month, until he turns 16. Currently, my wife makes about $160K/year (including 15% bonus). That will go up over time. My basic question is, will her high income eliminate or reduce the survivor's benefit for my child, and/or her benefit as the caretaker of our child? I just need to know what to tell her she can expect here (if anything), as I get my affairs in order.
As a side note, my statement indicates her benefit, at FRA, is $2303 (but she will make more on her own benefit when she retires at FRA). Total family benefits are listed as $4097. Can she claim any part of this when I die, without impacting her own benefit when she files at her own FRA, given her high income? If she were to quit her job, could she claim that whole $4097 on my account, and then file on her own when she reaches FRA?
Thank you,
Sean
Hi Sean. I'm very sorry to hear about your diagnosis. Your wife's earnings won't have any adverse affect on your child's survivor benefits, but it sounds like your wife's earnings will prevent her from collecting child in care survivor benefits. In 2022, Social Security withholds $1 of a person's benefit for each $2 that they earn in excess of $19560 if they are below full retirement age (FRA). Earnings of $160K in a year would require withholding all of a person's benefits if they aren't yet FRA.
Your wife could potentially apply for widow's benefits as early as age 60 and wait until up to age 70 to claim her own benefits, but unless she stops working or substantially reduces the amount of her earnings then she almost certainly won't be able to actually collect benefits until she is at or near FRA. She couldn't be paid the full family maximum from your account anyway, though. The most that your wife could be paid as a widow is 100% of your primary insurance amount (PIA), and if she starts drawing widow's benefits prior to her FRA her benefit rate will be less than 100% of your PIA.
The normal best filing strategy for a widow is to apply for the lower of their Social Security widow's or retirement benefit rates as soon as their earnings will permit them to collect at least some benefits, and then switch to the higher benefit rate when it reaches it's highest possible rate. Our software (https://maximizemysocialsecurity.com/purchase) could help sort that out for your wife, so she may want to strongly consider using the software when she's nearing age 60.
By the way, if your illness causes you to stop working or reduce your earnings to below roughly $1350 per month, you should consider applying for Social Security disability benefits (https://www.ssa.gov/benefits/disability/).
Best, Jerry
