Unraveling the Formula for Family Maximum Benefit

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Understanding the nuances of Social Security can be complex, especially when it comes to the Family Maximum Benefit (FMB). The FMB sets the limit on the amount of money that can be paid out to a family each month based on a worker’s Social Security record.

This blog post aims to demystify the formula behind the FMB and help you understand how it might impact your family’s benefits.

What is the Family Maximum Benefit?

The Family Maximum Benefit is a cap on the total monthly Social Security benefits that can be paid to a worker’s family. The cap includes benefits paid to the worker, their spouse, children, and in some cases, their dependent parents. The FMB typically ranges from 150% to 180% of the worker’s full retirement benefit.

How is the Family Maximum Benefit Calculated?

The Social Security Administration (SSA) uses a complex formula based on the worker’s Primary Insurance Amount (PIA). The PIA is the amount a person would receive at their full retirement age. It is based on the worker’s 35 highest earning years, adjusted for inflation.

The calculation for Family Maximum Benefit is done through a four-tiered system involving bend points, similar to the formula for calculating the PIA. The bend points change every year due to inflation and are published annually by the SSA.

Here’s a simplified example of how the Family Maximum Benefit might be calculated for a worker becoming eligible for benefits in 2023:

  1. 150% of the first $1,186 of the worker’s PIA, plus
  2. 272% of the worker’s PIA over $1,186 through $1,708, plus
  3. 134% of the worker’s PIA over $1,708 through $2,228, plus
  4. 175% of the worker’s PIA over $2,228.

These percentages are applied to the respective portions of the worker’s PIA, and the resulting amounts are summed to calculate the FMB.

Family maximum benefit - disability qualification

What Happens If Benefits Exceed the Family Maximum Benefit?

If the total of the benefits payable to all the family members on a worker’s record exceeds the FMB, each dependent’s benefit is proportionately reduced (except the worker’s) until the total equals the maximum allowable amount.

Understanding the Social Security rules for calculating the Family Maximum Benefit can help you optimize the benefits for your family. However, it’s important to keep in mind that each family’s situation is unique, and the calculations can vary based on different factors.

If you’re unsure how to calculate your Family Maximum Benefit or have any questions about your Social Security benefits, it’s recommended to seek advice from a Social Security representative or a financial advisor.

For the most accurate and up-to-date information, always refer to the official Social Security Administration website.

 

FAQ for Family Maximum Benefit

What Is The Family Maximum Benefit?

The Family Maximum Benefit puts a limit on the total amount of Social Security benefits that can be given to a worker's family. This includes benefits for the worker's spouse, children, and dependent parents, as well as the worker themselves. The amount of the cap usually falls between 150% and 180% of the worker's full retirement benefit.

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May 23, 2023

Written by TC Newlin

TC is a disability litigator and one of the managing partners in the Social Security Disability Department at Fleschner, Stark, Tanoos & Newlin. He has had the pleasure of helping thousands of people obtain the benefits they so desperately need.

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