On paper, the Social Security system has a generous payment to beneficiaries of someone who retires, dies, or becomes disabled. But what catches many people by surprise is that there’s a limit to these payments.
The Social Security family maximum
benefits rule may stop you from getting the full amount you might expect.
This article takes a very deep dive into
the issue to explain both the common, well-known rules around the Social
Security family maximum benefits — and the more obscure rules that cause
benefits to be capped to a range of 150%-188% of a retired, deceased or
disabled individual’s full retirement age benefit.
We’ll also go
over the calculation, and teach you how to determine what kinds of benefits to expect
in your own situation.
It’s rare for me to have a guest article on my site. However, a few weeks ago, I had a meeting that disturbed me. As soon as the meeting was over I contacted Texas Elder Law Attorney John Ross and asked him to write this guide for my readers on how to use Medicaid Long Term Care to pay for nursing home expenses.
I just couldn’t see a story like this happen again.
It’s been a few weeks now, but I still think about this meeting often. Listening to the woman that I met with her and her story was heartbreaking. I felt so sorry for her — but there was nothing I could do to help her.
I’m sharing her story with you here in hopes that someone else won’t make the same mistakes.
If you are attaining full retirement age in 2023, your maximum Social Security benefit is between $3,500 and $3,800.
That’s no small sum! If you wanted to get that same amount
of income from a portfolio of retirement savings you’d need A LOT of money at
the beginning of your retirement.
And it could get even better for you if you waited to file for Social Security. In 2023, the maximum Social Security benefit for an individual who delayed filing for benefits until age 70 is $4,555 per month. That’s more than $54,000 per year in benefits!
With dollars like these at stake, it makes good sense to pay
attention to the best filing strategies for you — and how to potentially claim
the
maximum Social Security benefit.
If you’re building a retirement income plan (and I hope you
are!), Social Security will likely play a role. As such, you need to know what
to expect in Social Security benefits when constructing your plan to ensure it
works.
Unfortunately, your Social Security benefits estimate from the statements you can pull from the Social Security Administration is not the best source of information on what to expect in the future.
The issue lies with the omissions that the Administration
makes with their estimate methodology. To understand why this is a problem, we
need to start with a basic overview of the calculation used to create your
Social Security benefit estimate.
With a
system as complex as Social Security, it’s
inevitable that misinformation (or simply a misunderstanding of the facts) will
spread. It’s hard to understand what’s true and what’s not, and often, our
brains prefer the version of events that feel intuitively more simple to
understand.
And of
course, Social Security is anything but
simple to understand.
If you’re retiring early for health reasons, do you know
what benefit to file for when you claim Social Security?
Most people don’t, and simply assume they just need to file
for retirement benefits. But if you could receive disability benefits instead,
choosing to file normally could cause you to miss out on a lot of money.
The Social Security Administration will not be the same in
10 years. They have a plan that is rapidly unfolding and some of this is
detailed in their “Vision 2025” strategic plan.
You might have heard a little about this already. The
Administration has a webpage devoted to it — but to really get into the meat
of what the Social Security Administration plans to do next, you have to dive
into the supporting studies.
Let’s take a look together in this article. I’ll help you
cover the entire spectrum of what the Social Security Administration (or SSA)
has in the works… and what I see as the biggest challenge to getting this off
the ground.
Most of us spend a lot of time figuring out how
to maximize the benefits we can receive from Social Security. After all, when
we’re talking about retirement, every extra income stream and every dollar
makes a difference.
So it might sound strange at first to talk about
how to stop your Social Security
benefits from coming in. But in some situations, there are a number of reasons
why stopping your Social
Security benefit is the right thing to do.
There’s a right way to do this, and a wrong way
— and you need to know the difference so you can understand when it makes
sense to turn off Social Security benefits, and how to do it correctly so that
action doesn’t come back to bite you down the road.
There are a few mistakes you can make with your Medicare
benefits that seem small, but actually carry some big, nasty consequences.
I’m talking about the kind of consequences that can cost you
thousands of dollars. That’s a lot of money that you could have on the line —
and the confusing Medicare system doesn’t make it any easier to avoid big
mistakes.
Medicare is full of confusing language, plans that seem awfully similar,
a lot of different deadlines, and more than a few hidden costs that can take
you (and your budget) by surprise.
I’ve seen more than a few people make these specific Medicare mistakes, and I want to help you avoid becoming just another one of many. Here’s what I see most often — and how you can avoid making these same errors.
It’s no secret that Social Security is not the easiest system to understand. A
maze of complex and complicated rules make it very hard to understand what is
and isn’t allowed, and there are a number of hoops everyone has to jump through
to ensure they get their benefits in the right amount.
Another not-so-secret fact about the system?
It’s plagued with problems, the biggest of which may be the fact that the
Social Security Administration’s trust funds will run out of money around 2035
unless someone finds a fix — and quick.
Considering this, it’s little wonder that people
are quick to take issue with anything about Social Security that seems to
indicate that someone is getting more benefits than they should. After all,
anyone receiving income from Social Security is pulling from a very finite pool
of resources.
The more money that goes to people who shouldn’t be receiving it means less for
people who truly need it.
So when it comes to people with felony
convictions who receive Social Security checks, it’s little wonder people get
very fired up about this topic. But there’s also a lot of misinformation
floating around about this topic, so let’s set the record straight about
whether felons have a right to Social Security or not.
A Felony Conviction Does Not
Automatically Disqualify Someone for Social Security
Not long ago, someone commented that the Social
Security system wouldn’t be in such trouble if we didn’t have prisons full of
people collecting disability and retirement benefits.
While I have a lot of content, in the form of
both blog posts and videos on my YouTube channel, dedicated to breaking down
and explaining the complex rules around Social Security, that comment made me
realize that I’ve never gone into detail on whether or not someone with a
felony conviction can receive benefits.
Here’s how this works: a felony conviction alone does not turn off your Social
Security benefits. But an individual cannot receive benefits while imprisoned
for more than 30 days for that conviction.
That detail is important! It means that if someone is arrested for a crime, and spends 90 days in county jail waiting on their trial, their benefits will continue. In order for the benefits to be suspended, they must be convicted and imprisoned for more than 30 days.
The Rules Around Medicare and
Other Benefits for Imprisoned Individuals
While we’re clearing up the misinformation
around whether or not convicted felons serving their sentences for their crimes
are eligible for benefits, let’s look at a few other important points that most
people don’t have the facts on.
If someone is on Medicare when they go to
prison, their Social Security benefits will stop. The automated payments to
Medicare Part B stop, as well — but those premiums are still due and payable.
If an individual does not pay their Part B
premiums, then their Medicare Part B coverage will discontinue. That person
would then have to reapply for benefits during an open enrollment period. The
result for that person would most likely be a much higher Part B premium.
The other interesting note is with regards to
spousal and childrens’ benefits. The rules are fairly clear that if a spouse or
child is receiving benefits from the work of an individual who is incarcerated,
that benefit will continue.
Keep in mind that before a spouse or child can
receive a benefit from another work record, the individual who owns that record
has to file first. If someone is in prison when they first become eligible to
file, then they can’t actually take that action — and if they can’t file, then
their spouses and children can’t receive their benefit.
What’s Your Take on This
Topic?
It’s easy to hear rumors like the one that a bunch of felons are sitting around collecting Social Security, and feel worried or concerned over whether that’s completely true. After all, Social Security is in some degree of trouble because funds will run out unless new rules or regulations go into effect soon.
But I ask that you really think this one
through. Some people believe that if an individual is being provided housing
and food by the government at taxpayer expense, they shouldn’t be able to get
any kind of Social Security benefit on top of that.
But you can consider this from another perspective, too. Some people say that if a prisoner worked for their entire life and contributed to the system, the government shouldn’t be able to seize any portion of that earned benefit.
Questions? If you still have questions, you could leave a comment below, but what may be an even greater help is to join my FREE Facebook members group. It’s very active and has some really smart people who love to answer any questions you may have about Social Security. From time to time I’ll even drop in to add my thoughts, too. Also…if you haven’t already, you should join the 100,000+ subscribers on my YouTube channel!
One last thing, be sure to get your FREE copy of my Social Security Cheat Sheet. This is where I took the most important rules and things to know from the 100,000 page Social Security website and condensed it down to just ONE PAGE! Get your FREE copy here.
