Social Security Q&A: Is There a Cap on the Benefits My Family Can Earn?

Happy senior couple
Photo by Rob Marmion / Shutterstock.com

Welcome to “Social Security Q&A.” You ask a Social Security question, and our guest expert provides the answer.

You can learn how to ask a question of your own below. And if you would like a personalized report detailing your optimal Social Security claiming strategy, click here. Check it out: It doesn’t cost much and could result in receiving thousands of dollars more in benefits over your lifetime.

This week’s question comes from Steve:

“Can you explain the Social Security family maximum amount? My friend — who earned the maximum earnings cap over his 35-year career — claims that he was told by an SSA representative that his wife could not claim spousal benefits equaling 50% of his benefit due to the family maximum allowance. This doesn’t sound right to me. Please advise.”

A breakdown of the family maximum allowance

Steve, you were correct in your suspicion that the Social Security Administration rep had misinformed your friend. Unfortunately, some SSA reps routinely give out bad advice.

There is, indeed, a family maximum allowance. But it comes into play only if the primary beneficiary has more than one dependent. For cases involving just a husband and a wife, the family maximum has no impact.

However, for cases involving a husband, wife and one or more children (or dependent parents), the family maximum will limit the total benefits payable.

The family maximum is tied to the primary beneficiary’s primary insurance amount (PIA), which is the benefit at the person’s full retirement age. The family maximum varies depending upon a person’s PIA. It ranges from 150% of their PIA up to 188% of their PIA.

In calculating whether the family maximum applies, delayed retirement credits are ignored. So, for evaluating the family maximum, the primary beneficiary’s contribution would be, at most, 100% of their PIA — less if they claimed early. Meanwhile, their spouse’s contribution would be, at most, 50% of the primary’s PIA.

When the family maximum is relevant, benefit reductions for the multiple dependents are spread equally among them. To illustrate, let’s assume that a principal beneficiary has a PIA of $1,000 — so the most any dependent could receive is $500. With a PIA of $1,000, the family maximum is $1,500.

So, if two dependents (for example, a wife and a child) are eligible for benefits, each would receive $250. With three dependents, each would receive $167.

An odd — and inequitable — formula

The family maximum is based on a formula that leads to odd and inequitable results:

  • At PIA amounts below $1,184, the family maximum is 150% of the principal’s PIA.
  • From a PIA of $1,184 to $1,708, the family maximum steadily increases to 188% of the relevant PIA.
  • Between $1,708 and $2,228, the family maximum declines from 188% to 175% of a person’s PIA. It remains at 175% for PIA amounts above $2,228.

So, the family maximum is the lowest for those with lower benefits, higher for those with the highest benefits, and highest for some in the middle range of benefits. This pattern is odd insofar as I can neither find nor imagine a sensible explanation for it.

It is also inequitable in that it favors higher-benefit families over lower-benefit families. This pattern is the opposite of the overall benefit structure of Social Security, which favors lower benefit families over higher benefit families.

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter, just as you would with any email in your inbox. If you’re not subscribed, fix that right now by clicking here. It’s free, only takes a few seconds, and will get you valuable information every day!

The questions I’m likeliest to answer are those that will interest other readers. So, it’s better not to ask for super-specific advice that applies only to you.

About me

I hold a doctorate in economics from the University of Wisconsin and taught economics at the University of Delaware for many years. In 2009, I co-founded SocialSecurityChoices.com, an internet company that provides advice on Social Security claiming decisions. You can learn more about that by clicking here.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
10 U.S. Jobs That Are Disappearing Fastest
10 U.S. Jobs That Are Disappearing Fastest

Think twice before pursuing these shrinking occupations.

9 Houseplants That Remove Toxins From Your Indoor Air
9 Houseplants That Remove Toxins From Your Indoor Air

These plants may also do everything from reduce the amount of dust in your home to improve your productivity.

What Is Umbrella Insurance, and Do I Need It?
What Is Umbrella Insurance, and Do I Need It?

Umbrella insurance picks up where car and homeowners insurance leaves off. Do you need it? Here’s how to know.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

6 Reasons I Will Never Trust Suze Orman
6 Reasons I Will Never Trust Suze Orman

Beware: The self-proclaimed personal finance expert has a track record that suggests more sizzle than steak.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
10 Things Frugal People Never Buy
10 Things Frugal People Never Buy

If you’re a true tightwad, the mere thought of spending money on these items gives you the willies.

10 Useless Purchases You Need to Stop Making
10 Useless Purchases You Need to Stop Making

You might as well flush your money down the loo if you spend it on these things.

7 Social Security Rules Everyone Should Know by Now
7 Social Security Rules Everyone Should Know by Now

Confusion over Social Security is a shame, considering how many of us will need this money badly.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

They don’t make coffee makers like this anymore.

7 Social Security Benefits You May Be Overlooking
7 Social Security Benefits You May Be Overlooking

There’s more to Social Security than retirement benefits.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

14 Things You Should Stop Buying in 2021
14 Things You Should Stop Buying in 2021

These convenient household products come with hidden costs that you might not have considered.

9 Shopping Mistakes to Avoid at Costco
9 Shopping Mistakes to Avoid at Costco

Are you missing out on serious savings at your favorite warehouse club?

Is Writing a Check Still Safe?
Is Writing a Check Still Safe?

Every time you pay by check, you hand your bank account numbers to a stranger.

8 Things You Should Replace to Improve Your Life Today
8 Things You Should Replace to Improve Your Life Today

Being frugal isn’t smart if you put off replacing these items.

6 Ways to Protect Your Retirement Accounts From Hackers
6 Ways to Protect Your Retirement Accounts From Hackers

Imagine having $245,000 stolen from your retirement account — and not being reimbursed.

The 6 Best Investing Apps for Beginners
The 6 Best Investing Apps for Beginners

If you’re looking to ease into investing in the coronavirus economy with just a little money, check out these easy-to-use tools.

10 Deep Discounts Available on Amazon This Friday
10 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

13 Amazon Purchases We Are Loving Right Now
13 Amazon Purchases We Are Loving Right Now

These practical products make everyday life a little easier.

This Is the Most Dependable Car Brand in the U.S.
This Is the Most Dependable Car Brand in the U.S.

This brand’s vehicles are least likely to give drivers repair headaches, according to J.D. Power.

7 Income Tax Breaks That Retirees Often Overlook
7 Income Tax Breaks That Retirees Often Overlook

Did you realize all these tax credits and deductions exist — or that they apply to retirees?

7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

7 Hidden Sections of Amazon Every Shopper Should Know
7 Hidden Sections of Amazon Every Shopper Should Know

These little-known departments of Amazon are gold mines for deal-seekers and impulse shoppers alike.

7 Costly Health Problems That Strike After Age 50
7 Costly Health Problems That Strike After Age 50

As we age, our bodies wear down. Here is how to cut costs associated with some common ailments.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.