17 Aug Are Social Security survivor benefits lowered if you have too much income?

Q. Do surviving spouses with children under 16 get Social Security benefits even if they make over the income limit?
— Unsure

A. We’re sorry for your loss, and for the loss of a parent to your children.

Navigating Social Security survivor benefits can be complicated, and it seems like you may be confusing a few of the rules.

You should think of survivor benefits as something of an insurance policy, said Jeanne Kane, a certified financial planner with JFL Total Wealth Management in Boonton.

If you die, your dependents may receive a portion of your benefit for a period of time, she said.

Then there are the retirement benefits, which you should think of like a pension.

“If you’re eligible, you will receive a monthly payment of Social Security retirement benefits based on your or your spouse’s income for the rest of your life,” Kane said. “You and/or your spouse paid into the system and get a benefit in retirement.”

A widow or widower of any age who is caring for the deceased’s child who is under age 16 is eligible for survivor benefits, Kane said. The benefit is 75% of the deceased spouse’s Primary Insurance Amount (PIA). The PIA is what the deceased spouse would have received at their full retirement age, she said.

“These benefits are not subject to the surviving spouse’s income,” she said. “These are subject to a maximum family benefit which is a cap on how much Social Security will pay out based on a deceased spouse’s benefit.”

The IRS uses a calculation to determine the maximum family limit, which ends up being between 150% and 180% of the basic benefit rate, Kane said.

“Families with multiple survivors such as a family where multiple children under the age of 16 are eligible for benefits are most at risk of exceeding the cap with their collective survivor’s benefits,” she said. “If the surviving family members’ benefits exceed the maximum, their individual payments will be reduced proportionally to meet the cap.”

Retirement benefits work differently.

If you work and claim your retirement benefits, your benefit may be reduced if you make too much, she said.

“If you earn more than $19,560 in 2022 and are below your full retirement age or if you earn more than $51,960 in the year you reach full retirement you will have your retirement benefits reduced,” she said. “If under full retirement age and over the income limit, benefits are reduced $1 for every $2 over the limit.”

And if in the year you reach full retirement age, if you are over the income limit, benefits are reduced $1 for every $3 over the limit, she said.

When you reach your full retirement age, there is no reduction in benefits based on your income, she said.

You should contact Social Security directly so it can explain your benefits based on your personal information.

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This story was originally published on Aug. 17, 2022.

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