I will be 63 in 2020 and have two dependent minor children both 14 years old. I will be earning $64,000 FICA wages in 2020 (approx 46400 over the earnings limit). My estimated monthly Soc Sec Monthly Benefits at 63 will be $2000 a month for a yearly SSA benefit for myself of $24,000. However, our family max benefit is estimated at $48,000 a year. Since my earnings test calculates out to 11 months of suspension ( 46400/2 divided by $2000 = 11.55 months suspension), would I still be eligible for taking SSA thereby allowing my dependent children to receive a part of their family benefits? If so, would the $48,000 family benefit thereby be reduced to 48,000 max - (46400/2) = $24,200 total family benefits available in 2020 if I retire while working?

Hi,

Based on your numbers it sounds like you and your children could potentially be paid benefits for at least for part of the year. If your reduced age 63 benefit rate would be $2000, that means that your full retirement age rate, or primary insurance amount (PIA), would have to be close to $2600. And, if that's true then the monthly family maximum benefit (FMB) that could be paid on your account would be roughly $4550. Your children's benefit amounts would then be determined by splitting the difference between your PIA and the FMB, which might give them a benefit rate of around $975 each.

Note that I have no way of verifying the accuracy of the above amounts, though. I'm just using rough figures for example purposes based on what you've stated. Here's an example of how the Social Security earnings test might work given those benefit rates.

Let's say the 2020 earnings test exempt amount stays at the 2019 rate of $17640, and that you plan to earn $64000 in 2020. Social Security would then need to withhold $1 of the benefits payable from your record for each $2 that you earn in excess of the exempt amount, which in this example would be $23,180. The monthly benefits payable in our example would total $3950 (i.e. $2000 + $975 + $975), so it would take roughly 6 months of withholding at that rate to cover the $23,180 that would need to be withheld based on your earnings. Therefore, if you and your children were eligible for benefits starting January 2020, in our example Social Security would withhold your benefits and your children's benefits for the first 6 months of 2020, and would then pay all 3 of you for the last 6 months of the year.

So, the positive argument for starting your benefits early would be that it would likely permit you and your children to be paid benefits sooner. The negative aspect would be that your monthly benefit rate would be permanently reduced for any months that you are paid benefits prior to your full retirement age (FRA). Before making your decision on when to apply for your benefits, you should strongly consider using our software to fully explore and compare all of your options in order to determine the best strategy for claiming your benefits.

Best, Jerry