Social Security's Family Maximum Rule

Is it something you should be worrying about?

I believe more and more parents are becoming aware of Social Security’s Family Maximum rule, but I’m not sure how accurate the information they receive is. TLDR - your spouse and child(ren)’s benefits may be reduced if they are all claiming on your benefit.

What do I mean by “claiming on your benefit”? When you’ve earned enough credits (typically 40) you will qualify to receive payments from Social Security. These payments will come either because you have been found to be too disabled to work or because you have retired.

The benefit you receive will be calculated on how much you paid into the system. Social Security will average your highest 35 wage-earning years. This is why I feel it’s so important those who are self-employed don’t focus so heavily on keeping their income low. Yes, they can reduce their taxable income by deducting business expenses, but they are also reducing their (and their child’s) future Social Security benefits.