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I know this isn't an SS board, but I'm posting here because it seems some posters here would know this.

I'm curious what benefits a family gets, if the head of household dies.

Me: 40 years old. I'm the sole earner. Have 'maxed out' SS contributions for 15 years and my latest SS statement claims I'll get $1800/month upon retirement. Also claims my family would get benefits if I died, in that kids would get around $1600/mo EACH until they are 16. Spouse caring for kids would get similar. "Max" benefit $4,200/month. But when you dig into it it's nebulous so I wash hoping someone here knows this.

1.)Say I croak now.

2.)Wife's income would be $140k per year, this is SOLELY thru interest/dividends on nest-egg.

3.)2 kids, let's say age 5.

What benefit, if any, would these family members get?

Thank you for reading.

Cb
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Me: 40 years old. I'm the sole earner. Have 'maxed out' SS contributions for 15 years and my latest SS statement claims I'll get $1800/month upon retirement. Also claims my family would get benefits if I died, in that kids would get around $1600/mo EACH until they are 16. Spouse caring for kids would get similar. "Max" benefit $4,200/month. But when you dig into it it's nebulous so I wash hoping someone here knows this.

1.)Say I croak now.
2.)Wife's income would be $140k per year, this is SOLELY thru interest/dividends on nest-egg.
3.)2 kids, let's say age 5.
What benefit, if any, would these family members get?
Thank you for reading.

Cb

============================
I don't know what to tell you other and what the annual statement from SSA says. What's nebulous?

Each kid would get about $19,200 per year. That sounds about right. And I think it's until age 18. Spouse would get about the same? Sounds about right.

Bill
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Hi Bill, thanks for reply.

The statement says stuff like "upto" $1600/month per child, "upto" 1600 for spouse caring for child, and 'max benefit' of $4356/month per family.

Just trying to plan some things out precisely and want to make sure if there are stipulations with the "upto".

Also...if spouse has $140k in investment income, I'm wondering if that negates any of the SS benefits to spouse and kids.

Cb
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Also...if spouse has $140k in investment income, I'm wondering if that negates any of the SS benefits to spouse and kids.

It doesn't affect the amount of benefits. It likely will mean that 85% of the spouse's benefit is taxable. (Worksheet for line 20 of the 1040)

Phil
Rule Your Retirement Home Fool
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The statement says stuff like "upto" $1600/month per child, "upto" 1600 for spouse caring for child, and 'max benefit' of $4356/month per family.

Just trying to plan some things out precisely and want to make sure if there are stipulations with the "upto".


Well, yes, it depends on how much you've been paying in over the years, just like for retirement benefits. So you've been paying in the maximum, but you're not that old, it might not be the maximum benefit. They'd all have to apply and get a detailed calculation, I think.

Also...if spouse has $140k in investment income, I'm wondering if that negates any of the SS benefits to spouse and kids.
Cb


I don't think so, but she will definitely be paying tax on the maximum 85% of the SS benefits. Survivors' benefits are taxed - or not - with the same rules as retirement benefits.

Bill
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The statement says stuff like "upto" $1600/month per child, "upto" 1600 for spouse caring for child, and 'max benefit' of $4356/month per family.

Each child under 18, or still in high school if 18, gets $1600 per month. Spouse gets the same if caring for a child under 16. The up to part simply means that if there is one child and one spouse, they each get $1600. If there are three or more, each gets a prorated amount so that the total does not exceed the max benefit. So two kids and mom would each get $1452 until both kids are 16. If there were three kids, each would get $1452 and mom would wait until one of them turned 18.

By the way, the same thing applies if you reach SS retirement age and have kids under 18.
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Thank you very much.

One step further....

1.)I croak.

2.)SS kicks in, kids/wife get said SS benefits.

After kids 18........ is wife on her own?

Is my interpretation right that once Wife hits retirement age, she'd be entitled to my SS retirement benefits?

Cb
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Unless your wife has reached retirement age, she only collects until your youngest child reaches age 16. When she reaches retirement age, she collects on her own ss account, which is then supplemented by what she is entitled to as your spouse, if that would make it higher. Basically she will collect the higher of what she earned, or what she is entitled to as your survivor. At least, that is my understanding.
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Wife hits retirement age, she'd be entitled to my SS retirement benefits?

She receives benefits either based on either her or a spouse's entitlement. Not both. She may have remarried, and the spouse's entitlement might not be yours.
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Actually, at retirement age she would receive either a benefit based on her own earnings record ("A" benefits) or (if her widow benefit would be higher) a benefit that would be her "A" amount and and additional amount to bring the total to the higher Widows benefit. You will always collect your "A" benefit.

JimA
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Actually, at retirement age she would receive either a benefit based on her own earnings record ("A" benefits) or (if her widow benefit would be higher) a benefit that would be her "A" amount and and additional amount to bring the total to the higher Widows benefit. You will always collect your "A" benefit.

JimA


Not completely true. After reaching full retirement age, it is possible to request benefits based only on spousal benefits. At a later date, it is possible to switch to your own entitlement. This allows your benefits to increase while drawing spousal benefits.
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Survivor benefits from SS are always a bit convoluted.

If you die prematurely (prior to being eligible for benefits), your PIA will be recalculated up to the date of death (the benefit shown at your retirement age assumes you will continue to work and earn at your current rate). Your family members would be eligible for the following survivor benefits:

Each child under 18 (19 if still in HS) will be eligible for 50% of your PIA. It does not matter how many children you have.

Your spouse is eligible for 50% of your PIA as a caretaker spouse if any of the children are under 16. When the youngest child attains age 16, this benefit stops and the spouse will go into a 'blackout' period until she either remarries or attains age 60 (age 50 if disabled). If unmarried at 60, she would be eligible for a reduced benefit on your PIA. At 62 she would become eligible for the greater of a benefit based on her PIA or your PIA. Same if she delays beginning benefits past age 62.

The children's and caretaker spouse and retirement benefits beginning prior to full retirement age are subject to earned income limitations. If the beneficiary earns more than a certain dollar amount ($1,560/month (2013)), the SS benefit will be reduced by $1 for every $2 of earned income over this amount. Note, this is for earned income....income from either an empoyer or self employment. Unearned income doesn't count.

The total household benefit is limited to between 150 and 188% of the decedent's PIA, depending on the amount of the PIA, as it is on a sliding scale. If the total of all household individual benefit exceeds this %, then all beneficiaries will have their benefits reduced proportionally.

A complicated area.

BruceM
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If you die prematurely (prior to being eligible for benefits), your PIA will be recalculated up to the date of death (the benefit shown at your retirement age assumes you will continue to work and earn at your current rate)

Bruce,

Is there a calculator on line where one can calculate their expected SS benefits based on an early retirement, (by choice and living, not dying.) Do you know what the formula is?

TIA,
IP
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Is there a calculator on line where one can calculate their expected SS benefits based on an early retirement, (by choice and living, not dying.) Do you know what the formula is?


Sorry, should have googled first then asked if I couldn't find it:


http://www.ssa.gov/pubs/EN-05-10070.pdf

IP,
still sucking down her first cup of caffeine
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IP
I have used this table of wage index inflators in the past, but usually for one who wishes to retire early....say in their 50s, to get an idea of what their SS benefit will be years into the future.

One of the drawbacks to such early retirement is the PIA calculator requires one to use 35 years even if there are zeros in some of the years. However, when one dies, I think only the earnings years are used. I say I think, because I've not seen this addressed in the SS instructions and for family beneficiaries, the SS Administration will figure out the PIA and the survivorship benefit for them.

But the table you provide is a good one to use for those who do wish to retire early. But keep in mind that the bend points are indexed for inflation, so they will change year to year.

BruceM
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Here is verbatim, what my personal SS account online says:

Survivors
*********

"You have enough credits for your family to qualify for survivor benefits. If you die this year, certain members of your family may be eligible for these benefits:

Your child:


$1,948 a month

Your spouse who is caring for your child:


$1,948 a month

Your spouse (starting at full retirement age):


$2,597 a month

Your total family benefits cannot be more than $4,545 a month"
*****************

THe only reason I'm seeking more clarification is that it says "MAY be eligible for these benefits".

So i'm trying to ascertain if there's any reason my wife/kids would not be eligible for said benefit, or if the benefit would be curtailed for any reason.

Thanks. Cb
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Sorry, should have googled first then asked if I couldn't find it:


http://www.ssa.gov/pubs/EN-05-10070.pdf


Thanks for asking and then posting the link. That led me to stuff I didn't think to look for on my own.

Patzer
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THe only reason I'm seeking more clarification is that it says "MAY be eligible for these benefits".

Off the top of my head:

1. They don't know how old your children are.

2. They don't know whether your spouse has your replacement waiting in the wings after a decent mourning period---say 48 hours.

It all sounds pretty clear to me, and you already seem to have suspenders and a belt. Go for the stapler, and you remember what happened to that guy....

Phil
Rule Your Retirement Home Fool
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BruceCM: "But the table you provide is a good one to use for those who do wish to retire early. But keep in mind that the bend points are indexed for inflation, so they will change year to year."

Not onlyt he bend points, but also the "Index Facor" for each year will also be indexed for inflation.

Regards, JAFO
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THe only reason I'm seeking more clarification is that it says "MAY be eligible for these benefits".

OK, you have already been told about the potential reduction for earned income, and you already know about the potential proration due to the family maximum. What are you looking for - the suicide exception? Clearly you are worried about something unspoken, and I'm not sure what else it could be. I don't feel qualified to help here without more info, but if that is the situation I would urge you to seek local help. There has to be a better way.
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1.Kids Ages

10 and 5


2.Wife re-marry. (No, for purposes of this discussion).


Thanks
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Yes, the info has been great so far. Was just hoping someone could clarify what the earned income reduction would be. (*one more clarification...pretty please) I've quoted what my SS account says below.

But bottom line: Wife would have $140k investment income. There would be 2 kids, aged 10 and 5. Trying to figure out, what is the TOTAL monthly benefit they'd get until the kids were 16 or 18?




"Survivors
You have enough credits for your family to qualify for survivor benefits. If you die this year, certain members of your family may be eligible for these benefits:

Your child:


$1,948 a month

Your spouse who is caring for your child:


$1,948 a month

Your spouse (starting at full retirement age):


$2,597 a month

Your total family benefits cannot be more than $4,545 a month."

Thanks for responses so far.
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FYI my unspoken worry....

Bad life insurance test. (urine)

I have reason to believe I'm going to have kidney problems.

Gonna see specialist next week.

But right now, terrified

Trying to figure out what exact monthly SS benefit would be for wife and kids as I try to put a fiscal plan in place.

Thanks, CB
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Bruce...

I reread your great post, thank you. Here's the summary and was hoping you'd chime in one more time:


*The $140k income for my wife would NOT be "earned" as it would be derived from CD's and hopefully investments.

*Kids would be aged 10 and 5 when this starts.

*SS website says "$1948 for your child", "$1948 for spouse caring for child".

"Total Family Benefits can't be more than $4545 per month."

Based on all of that, can you give me your estimate/guess on what the total monthly benefit would be?

Thanks, Cb
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*SS website says "$1948 for your child", "$1948 for spouse caring for child".

"Total Family Benefits can't be more than $4545 per month."

Based on all of that, can you give me your estimate/guess on what the total monthly benefit would be?


Seems like pretty straightforward math to me.

2 kids - $1948 each
spouse $1948.

That totals $5844, which is more than the family limit of $4545. So the family would get $4545 - with 1/3 of that going to each of your 3 survivors. (Which make a bit of a difference for income tax purposes, as only your spouse's benefit would be taxable based on the other income you have mentioned earlier. The kid's benefits will be tax free, unless they also have some other income.)

--Peter
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Cb
I'm on the road through the weekend so don't have much time to do research.

Just out of my back pocket, the numbers you've shown from your page at the SS web site don't sound right. The rules clearly state that caretaker and eligible children are 50% of PIA, and PIA is defined as your benefit at FRA. According to SS, the max benefit for 2013 is about $2550, as I recall. So I have no idea how they came up with $1,948 per child and caretaker spouse (which would mean a PIA of about $3,900/mo) or a PIA of about $2,600 for your spouse at FRA....unless they grew your current year survivor PIA at inflation for the next 27 years.

If this is important to you....as it sounds it might be....you might want to call your local SS office and make an appointment to go in and talk to a benefits advisor. I've had several clients do this, who have been happy with the information they were provided and the way it was explained to them. But be advised....beginning last year was the first year of eligibility for the median age baby boomers (1949 birth year) and so most offices have been very busy.

If you find out, please post back, as I'd be interested in seeing what they say.

BruceM
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BruceCM: Just out of my back pocket, the numbers you've shown from your page at the SS web site don't sound right. The rules clearly state that caretaker and eligible children are 50% of PIA, and PIA is defined as your benefit at FRA. According to SS, the max benefit for 2013 is about $2550, as I recall. So I have no idea how they came up with $1,948 per child and caretaker spouse (which would mean a PIA of about $3,900/mo) or a PIA of about $2,600 for your spouse at FRA....unless they grew your current year survivor PIA at inflation for the next 27 years.
=========================
That doesn't sound right for survivors' benefits. The annual statement I get from SSA shows estimated survivors' benefits quite a bit higher than my projected retirement amount. OR are you looking for the benefits for young children of a retiree? That's a different matter, and that would be lower.

Bill
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Hi Bill...

I asked Bruce the original question.

It was for survivors of a NON-RETIREE.

Meaning, I would croak at age 40, and was trying to find out what 2 kids + 1 wife would get.

Cb
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Does this help.

http://www.ssa.gov/OACT/COLA/familymax.html

snip
Formula for Family Maximum Benefit

The formula used to compute the family maximum is similar to that used to compute the Primary Insurance Amount (PIA). The formula sums four separate percentages of portions of the worker's PIA. For 2013 these portions are the first $1,011, the amount between $1,011 and $1,459, the amount between $1,459 and $1,903, and the amount over $1,903. These dollar amounts are the "bend points" of the family-maximum formula. Thus, the family-maximum bend points for 2013 are $1,011, $1,459, and $1,903. See table showing bend points for years beginning with 1979 (table also shows PIA formula bend points.)
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Thanks for taking the time Bruce.

"The rules clearly state that caretaker and eligible children are 50% of PIA, and PIA is defined as your benefit at FRA. According to SS, the max benefit for 2013 is about $2550, as I recall"

So you are saying that the MAX, as you understand it, that a spouse and kids can get if I pass away at age 40...is $2550 per month?

You are right, confusing indeed cause the website says the $4500 or whatever.

Excellent suggestion, I'll go to an SS office.

Will bug you more on Monday instead of during your weekend :)

Cb
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Thanks.

Hopefully a few here understand why I'm confused.

The website that I copied and pasted (ssa.gov) from my personal account says "max benefit for family" of $4500-ish.

It also says $1948 for child, $1948 for spouse caring for child.

One assumes that a child getting $1948, will have the live-spouse caring for it, so one assumes that both child and spouse get $1948 a piece.

But then there's Bruce's post, and the thing Jean posted that shows the max a family can get is $1900/month.

In a way I feel very stupid cause on one hand, it's written in plain english on my personal SS statement. But then there's the "max" 1900 that Bruce, and also Jean's formula page are showing.

Cb
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From the SSA websie:
http://www.ssa.gov/policy/docs/workingpapers/wp103.html

"Social Security calculates benefits based on primary insurance amounts (PIAs)—a figure based on a worker's average lifetime monthly earnings in Social Security-covered employment. A person's PIA increases with earnings, but the PIA formula favors low earners. A widow(er) caring for a deceased worker's child who is under age 16 or disabled is eligible for a monthly benefit potentially equal to 75 percent of the deceased worker's PIA. Each child who is under age 18, disabled, or aged 18 to 19 and attending high school is also eligible for a benefit potentially equal to 75 percent of PIA. T he widow(er)'s eligibility ends when he or she remarries or when the youngest child reaches age 16, whichever comes first. However, the children's benefits continue as long as they are categorically eligible.

Although each survivor is potentially eligible for 75 percent of PIA, two provisions of Social Security—the family maximum and the earnings test—can reduce this amount."

The family maximum of Social Security limits the total amount that can be paid on a given worker's record and is a function of the worker's PIA.

. . .

[T]the earnings test of Social Security also affects the marriage penalty a widow(er) faces. In 2001 the earnings test requires that, for each two dollars of annual earnings above $10,680, a widow(er) loses one dollar of his or her Social Security benefit (the $10,680 figure is referred to as the exempt amount and is adjusted annually by the Social Security Administration (SSA) based on wage growth in the economy)."

Follow the link to read the details and examples.

See also: http://www.ssa.gov/oact/progdata/types.html

regarding survivor beneficiaries.

"Within a family, a child may receive up to one-half of the parent’s full retirement or disability benefit, or 75 percent of the deceased
parent’s basic Social Security benefit. However, there is a limit to the amount of money that can be paid to a family. The family maximum
payment is determined as part of every Social Security benefit computation and can be from 150 to 180 percent of the parent’s full
benefit amount. If the total amount payable to all family members exceeds this limit, each person’s benefit is reduced proportionately
(except the parent’s) until the total equals the maximum allowable amount."

http://www.ssa.gov/pubs/EN-05-10085.pdf

And last, but not lest,


http://www.ssa.gov/pubs/EN-05-10084.pdf - 17 page SS publication regarding survivor's benefits.

Regards, JAFO
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JAFO
Yep, you're right...my bad.

Survivorship benefit to qualifying children, dependent parents and caretaker spouse is 75% of PIA (up to 82.5% for each dependent parents), not 50%, and its 100% of the PIA to the spouse at the spouse's FRA. Retirement benefit to qualifying children and caretaker spouse is 50% of PIA.

Another kind of interesting point about survivorship benefits is that it does not require the insured worker to be fully insured (40 quarters), it requires only that the worker as of the year of death, be "Currently Insured", which only requires the worker has 6 'good' quarters out of the most recent 13 quarters.

So at $1,948, this is 75% of the quoted $2,597. But I still don't understand this value, as it exceeds the maximum PIA SS has given on its web site for 2013. I'm sure there's a good reason for it, I just don't know what it is.

BruceM
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So at $1,948, this is 75% of the quoted $2,597. But I still don't understand this value, as it exceeds the maximum PIA SS has given on its web site for 2013. I'm sure there's a good reason for it, I just don't know what it is.
===================================

Looking forward to 2014?
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