If you’re age 62 or older and are still raising young children, there’s a Social Security benefit strategy that can put some extra money in your family coffers.
Here’s how it works. When you file for Social Security retirement benefits, your minor children can get money on your work record equaling half of what you would receive at full retirement age, now gradually rising from 66 to 67. Even if you were to take a smaller benefit by claiming earlier, your kids will still get half of your full-retirement age amount.
To qualify, your daughter – whether she’s biological, adopted or a stepdaughter – must be unmarried and under age 18. Kids that are over 18 but still in high school can collect too until they graduate or turn 19, whichever comes first. (Other rules apply to kids that are disabled.)
But that’s not all.
If you have a child that is under 16, your spouse (if you’re married) can collect Social Security benefits on your work record too, and it doesn’t matter if they are just 40 years old. The minimum age requirements to collect retirement benefits (62) or survivor benefits (60) does not apply when it comes to collecting benefits as the caregiver of a young child. The spouse’s benefit, which is also worth up to half of your benefit, will stop when your child turns 16.
But note that there are limits to the amount of money that can be paid to a family. The Social Security “family maximum payment” is determined by a complex formula and can range from 150 to 180 percent of your full retirement benefit amount. If the total exceeds that, each person’s benefit, except yours, is cut proportionately until it equals the maximum.
Here’s an example of how that’s figured. Let’s say, for example, that your full retirement age benefit is $2,400 per month. That would make your family maximum benefit, according to the Social Security formula, roughly $4,200 per month.
Subtract your $2,400 benefit from the $4,200 family maximum benefit, which leaves $1,800. That’s the monthly amount that can be split between your children each. If your spouse wants in on it too, the individual checks are smaller, but the family amount is the same.
You should also know that minor children can collect up to half of a disabled parent’s Social Security disability benefit. And if the parent dies, they will get a survivor’s benefit, which is up to 75 percent of the deceased parent’s basic Social Security benefit.
To learn more, see the SSA publication (No. 05-10085) “Benefits for Children.”
Social Security benefits for your kids may not be available before full retirement age if you are still working. In 2021, you will lose $1 in benefits for every $2 earned over $18,960, except in the year you reach full retirement age. In that case, the earnings limit is $50,520, with $1 in benefits withheld for every $3 earned over the limit.
If you lose your benefits, your dependents also lose theirs. You can recoup those payments later, but your kids can’t.
Jim Miller publishes the Savvy Senior, a nationally syndicated column that offers advice for Boomers and Seniors.