Will Taking Social Security Early Affect My Disabled Daughter’s Benefits?
If I were to claim Social Security at age 62, while still working part-time, so my benefit will be reduced to a very small amount or zero, how would that affect the benefit that my disabled daughter (disabled since birth) would receive claiming on my record? For example, if my reduced benefit at 62 is $1,600 a month, my child is getting $800. Then if I make enough money to reduce my benefit to zero, what’s the effect on her $800 payment? Also if my benefit is reduced to zero for all the years between 62 and 67, my full retirement age, and I stop working at 67, will my benefit be at 100% of what I would get if I had waited to start claiming until 67?
The short answer is that if your benefits go down due to your earnings, your daughter’s will as well. But, when you reach age 67, the reduction of your full Social Security benefits will take into account only the early retirement benefits you actually received.
Here is why: If you are receiving Social Security retirement benefits and are under full retirement age (FRA), your benefits will be reduced if your earnings exceed the maximum allowed under the Retirement Earnings Test (RET) (For 2019, the deduction is one dollar for every two dollars of earned income over $17,640.)
Under the Social Security Administration’s rules, the benefits of any dependents who are collecting auxiliary benefits based on your earnings record would also be reduced. This includes auxiliary benefits paid based on age, as well as those based on disability prior to age 22—that is, recipients of Childhood Disability Benefits (CDB) like your daughter. (For the record, there is an exception for auxiliaries who are receiving benefits as divorced spouses.)
The same formula for the reduction applies to both the worker and the auxiliaries. So if your earnings are high enough so that under the RET, your benefits are reduced to zero, your dependents’ benefits will also be reduced to zero until you reach full retirement age.
The good news is that the SSA will take into account the reduction in the benefits you received prior to age 67, when they calculated your full benefit at 67. So, in your case, if you claimed benefits at 62, then you wouldn’t receive any benefits for two of the four years between then and 67 because of your earnings, and the SSA would recalculate your full benefit by reducing the actuarial reduction for claiming early. This calculation would take into account only the benefits you actually received during the period between 62 and full retirement age.
But beware if your benefits are reduced for your full retirement because if you started receiving them before your FRA, they will be reduced for the rest of your life—plus your daughter’s benefits will be reduced for the rest of her life. You will have to calculate whether the value of the benefits you and your daughter receive during your early retirement are likely to exceed any reduction in benefits you and she may receive by taking Social Security early. But also be aware that unlike your own Social Security benefits, your daughter’s benefits will not increase if you delay taking benefits after your FRA until you reach age 70.
You may be wondering, did I know the answer to your questions off the top of my head? Absolutely not! I just consulted the SSA’s Program Operations Manual System (POMS) here: POMS DI 10115.001 and here POMS RS 02501.021.
If you want even more information (or you are having trouble getting to sleep at night) here is a report I came across, authored by the Congressional Research Service which provides a comprehensive discussion of the Retirement Earnings Test, and the costs vs. benefits of eliminating it.
This response is provided by Mark Bronstein, Esq., who has been representing individuals in disability related matters since 1980. In addition to Social Security disability and retirement claims, he handles claims under private and group disability insurance plans, and also consults with individuals who have chronic or progressive illnesses and are “still working but worried.” In addition to representing individuals, he regularly consults with other attorneys on complex cases, and provides training and support to legal, chronic illness, and provider organizations. He is based in Newton, Massachusetts and can be reached at firstname.lastname@example.org or 617-244-5551.