Social Security is a very complex program. Unfortunately, there are many “armchair experts” out there who think they know how Social Security works. Considering that Social Security has well over 2,200 separate rules explained in over 110,000 online pages of information, it’s no small wonder that those seeking answers are often given incorrect advice by those not sufficiently experienced in Social Security’s complex labyrinth of regulations, while some also seek SS information on their own but incorrectly interpret the rules. Here at the AMAC Foundation, our Social Security Advisory staff is highly trained, accredited by the National Social Security Advisor (NSSA®) program, and certified by AMAC’s very rigorous certification program to provide fast and accurate answers to all your Social Security (and Medicare enrollment) questions. Thus, in our articles and our work, we strive to correct and share the many common misunderstandings we regularly encounter. Some of those misunderstandings relate to Social Security’s “Family Maximum.”

The “Family Maximum” Social Security Benefit

Even a quick look at your Social Security Statement of Estimated Benefits reveals a very prominent limiting factor called the “Family Maximum.”  But what is this limitation; what does it mean; and how does it affect your benefits? Very good questions, and the subject of many inquiries we received here at the AMAC Foundation’s Social Security Advisory Service. Let’s first look at how the Family Maximum is determined:

Defining the Family Maximum

The Family Maximum is a limit for how much Social Security will pay on any one person’s lifetime SS record of earnings. It is unique to each working individual and is calculated from the worker’s Primary Insurance Amount (PIA). The PIA is the basis for all Social Security benefit calculations. 

For reference, the worker’s “PIA” is the amount of SS retirement benefit available to someone who claims their SS retirement benefit exactly in the month they attain their full retirement age (FRA). Without getting into the specifics of the Family Maximum formula, each worker’s PIA is broken into four segments, and a percentage of each segment is used to arrive at that worker’s total Family Maximum. Typically, the family maximum calculates to between 150% and 188% of the worker’s PIA. If you really want to explore the formula details, see this.

The Most Common Misunderstanding

One common misunderstanding about the Family Maximum occurs when a married couple are both entitled to a personal SS retirement benefit based on their own lifetime work record. When looking at their estimated individual SS retirement benefits, they might find that their combined estimated SS retirement benefits exceed the highest Family Maximum indicated on their Statements of Estimated Benefits. And that makes them think that their individual SS retirement benefit may be reduced.  But that is not true, for this reason:

  • The Family Maximum does not limit how much each individual spouse can receive for their personal SS retirement benefit. The Family Maximum only applies when multiple dependents are collecting benefits from someone who is collecting Social Security retirement, disability, or survivor benefits.

Now, with that misunderstanding out of the way, let’s look at how the Family Maximum works in practice.

How the Family Maximum Works

As indicated above, the Family Maximum limits how much can be paid to dependents who are claiming on an individual worker’s Social Security record. The Family Maximum usually computes to between 150% and 188% of the worker’s PIA, but the worker’s personal PIA amount is always paid first. Thus, only the remaining portion of the Family Maximum (after the worker’s PIA is deducted) is available for dependents. That means only 50% to 88% of the Family Maximum amount is usually payable to a worker’s dependents.

Since dependent benefits (such as benefits for a living spouse, minor child, or disabled adult child) are typically capped by SS rules at 50% of the worker’s PIA, multiple dependents collecting on the same worker’s record can mean that each dependent will not get the full 50% of the worker’s PIA. What essentially happens is that the remainder of the Family Maximum (after the worker’s own PIA is paid) will be proportionally distributed among all eligible dependents. In other words, the dependents will not get the full 50% of the worker’s PIA, they will each get a smaller amount, which totals to the worker’s full Family Maximum amount. And, in situations where only the worker is entitled to SS retirement benefits, that means each dependent will share a portion of the remaining Family Maximum. But there is also a silver lining in the Family Maximum (FM) rules for a married couple when both are entitled to SS retirement or disability benefits based on their individual lifetime earnings records. And that is called the ‘Combined Family Maximum.

A “Silver Lining” – The Combined Family Maximum

The Combined Family Maximum, as the name suggests, means that the Family Maximum (FM) amount available to all dependents will be limited by the combined FM amount of both marital partners. Consider a scenario where a married couple are both collecting Social Security retirement benefits and have one dependent (minor or disabled adult child).  If the indicated Family Maximum for Spouse A is $5,600 and the indicated FM for Spouse B is $1,600, then their combined family maximum would be $7,200.  Spouse A’s PIA would be deducted from that total combined family maximum amount available. If  Spouse A’s PIA is $3,200, that amount would be deducted from the combined family maximum amount, leaving about $4,000 to be proportionately shared by Spouse A’s[1] dependents. Thus, in most cases, when both parents are eligible for SS retirement benefits, a single dependent will normally get the full 50% of the parent’s PIA. However, when multiple dependents exist, the benefit for each may be somewhat reduced by the Family Maximum. If one spouse is also entitled to a spousal boost from the other (in addition to their own SS retirement benefit), and another dependent is also collecting auxiliary benefits, the portion of their total benefit related to being a spouse may also be limited by the Combined Family Maximum. Generally, however, the Combined Family Maximum will usually provide additional leeway for all dependents to get a higher SS benefit.

If this all sounds confusing, that’s because it is. Which is why it is always best to seek counsel from an experienced Social Security Advisor for complex factors such as the Family Maximum.

[1] Anytime a dependent is eligible for SS benefits on more than one SS record (e.g., both a father’s and mother’s SS record), they can receive auxiliary benefits on the record of the parent with the highest PIA, limited by the combined family maximum.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org. Because we are a non-profit organization, our services are free.