Stop Paying Your Kids

February 2024

An alternative to paying your kids - pay your spouse instead.

The reason for this is - in order to qualify for their own social security benefits, they need at least 40 quarters of work (10 total years) and at least $1,730 earnings each year to earn 1 credit (this amount goes up slightly each year and you can earn a maximum of 4 credits a year).

Additionally, paying your spouse a wage unlocks additional retirement contribution options on earned income not available if they aren’t earning a wage. Another benefit is if you’re a solo-business owner, having a spouse as your only employee doesn’t affect your solo 401(k) eligibility.

If your spouse doesn’t meet the 40 credit minimum, they can be eligible for the spousal Social Security benefits - which can be up to half as much as the primary worker’s benefits.

The way to maximize this benefit is for both spouses to delay collecting SS benefits as long as possible (to maximize the benefit amount) since benefits will increase roughly 8% each year filing is delayed.

If you’re 10 or more years out from retirement, these are conversations and planning you should be having in order to make sure you’re budgeting correctly for retirement.

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