I am 64 and my wife will be 63 next month. We have a 20 year old disabled child who is currently living with us. Our daughter will rely heavily on Social Security benefits since her earnings will be minimal. My question has to do with maximizing her Dependent Adult Child (DAC) benefits. My social security benefit statement shows my benefit at FRA as $2390/month, at age 70, it will be $3220. The Maximum Family Benefit is shown as $4090.

I was planning to wait until 70 to claim benefits in order to maximize my benefit but now I wonder if doing so will adversely affect my daughter's benefit. Using the figures above, if I wait until 70, her benefit will be only $870. Alternatively, if I begin taking the benefit at my FRA, I would receive $2390 and she could be eligible for up to $1700. The Social Security website explains the Maximum Family Benefit but then goes on to say "there is a special formula for computing the maximum benefits payable to the family of a disabled worker", but it does not go on to explain the formula.

Our goal as parents is to make sure our daughter maximizes her SS benefit. What strategy do you suggest to maximize benefits to myself as well as to our daughter?

Hi,

It sounds like you have some misconceptions about the family maximum benefit. Your daughter's potential disabled adult child's (DAC) benefits will not be any lower if you wait until age 70 to file for your benefits. Nor would they be any higher if you file sooner and receive a lower benefit rate yourself. Any benefit rate increases that you receive from delayed retirement credits (DRC) as a result of waiting past full retirement age (FRA) to file for your benefits will not count toward your family maximum rate when calculating the benefit amounts payable to your eligible family members.

When calculating the rates payable to family members on your record, Social Security would subtract your full retirement age rate (PIA) from the family maximum amount regardless of when you start drawing your benefits. The remainder could potentially be paid to eligible family members, but only up to their maximum original benefit rate. The original benefit rate for a DAC on the record of a living parent is 50% of the parent's PIA, and the original benefit rate for a DAC on the record of a deceased parent is 75% of the parent's PIA. Therefore, it sounds like your daughter's potential benefit rate as a DAC would be roughly $1195 (i.e. $2390/2). The family maximum shouldn't be an issue in your case unless your wife also files for benefits on your record.

You and your wife should strongly consider using the maximization software available on this website in order to determine the best overall filing strategy for you and your family members.

Best, Jerry