Monday, December 6, 2010

Social Security for older fathers

Every year most of us receive notification from the social security administration advising us what our estimated monthly social security benefits will be at age 62, at our normal retirement age (66 or even higher for some of you youngsters), and at age 70. You can also use the social security administration's retirement estimator and calculate it yourself.

For me, it tells me that my monthly benefit at age 62 will be $1,761. At age 66 it will be $2,386. The benefit at age 62 is 75 percent of what it would be at age 66. Also, at age 66 you can continue to earn income without any reduction in social security. At age 62 there will be a reduction in your social security payment after you receive around $13,000 in earned income.

What the retirement estimator does not do for you is tell you what your additional benefit will be to help you support your minor children. The formula (as the social security administration tells you) is complicated. But generally, you will receive a 50 percent bonus for each dependent minor with a maximum bonus for additional children equal to no more than 180 percent of your base benefit. So, for one minor child, I will receive an additional payment of around $880 a month and, for two children, a total additional benefit of as much as $1,400 a month. Those supplemental payments will end when the children turn 18 (or 19 if they are still in high school).

In my circumstances, my kids will be 10 and 11 when I turn 62, so for 8 years I will receive an additional benefit of $1,400 a month (almost $17,000 a year) dropping to $800 (in nominal dollars) in the last year. This is something to think about!

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