Interesting fact: 98 out of every 100 children are eligible for benefits if a working parent dies. I was very surprised out how large this number is. In fact, Social Security pays more benefits to children than any other federal program.
According to SSA.gov, about 4.3 million children receive benefits from the 2.6 billion Social Security distributes each month by qualifying for benefits for children.
How to Qualify for Benefits for Children
When you qualify for Social Security retirement benefits, your children may also qualify to receive benefits based on your record. Whether it is your biological child, stepchild, or adopted child, they are all treated the same in the eyes of Social Security, and all would qualify. Dependent grandchildren may also qualify.
You are going to hear the term “retirement benefit” mentioned throughout this article. I thought it would be helpful to provide a quick definition. A retirement benefit is simply the benefit you are eligible receive from Social Security once you have reached the minimum age to start collecting your primary insurance amount (PRA). For more on this, please see my article: The Basics: Full Retirement Age and Social Security.
Your unmarried children may be eligible for benefits if they are younger than age 18 or up to age 19 if they’re attending high school full-time. Your children can get benefits at any age if they were disabled before age 22 and remain disabled, with no age limit.
In both cases, that same parent would have to be entitled to Social Security benefits by earning the proper amount of credits for survivors benefits. For more information on qualifying for benefits, please read my other article from my Rules You Should Know series: How You Can Earn Credits to Qualify for Benefits.
Notably, you — the parent — would have to apply for your own benefits to start receiving benefits for children. For example, let’s say you have a husband and at full retirement age they have children under 18. If your husband delays benefits to age 70, and if your children still qualify, your children could start collecting benefits when your husband reaches age 70.
If My Child Receives Benefits, Does it Reduce My Retirement Benefits?
No. In some cases, if you are eligible for retirement benefits and you have children under the age of 18, it may make sense to take benefits before your full retirement age. For more on full retirement age, please read: The Basics: Full Retirement Age and Social Security.
How Much Will My Kid(s) Receive?
As you can guess, there a few different rules and scenarios. I will break them down for you according to Social Security guidelines laid out on SSA.gov.
As a rule, generally each child can receive up to 50% of the parent’s full retirement or disability benefit. However, even if the parent files for Social Security benefits early (before full retirement age), the child’s benefit does not get reduced — it is still based on the parent’s primary insurance amount.
If a child qualifies for survivors benefits, they can get up to 75% of the deceased parent’s Social Security benefit. However, there is a limit that Social Security will pay to your family, referred to as the “family maximum.” The benefit is paid to the parent or guardian of the child, to be used for the benefit of the child.
How Benefits for Children Will Impact Your Decision on When to File for Social Security Benefits
In my other article, Why Knowing When to File for Social Security is Difficult — Really Difficult, I spend a lot of time discussing different strategies and outcomes based on when you file. When you have children, their benefits cannot be ignored, and it puts another whole set of analyses at play.
Let’s look at some examples.
For these examples, to make things easy or for illustrative purposes, we are going to consider a single woman parent named “Joann Example.” Her date of birth is 1/15/1957, her full retirement age is 66 and six months, her estimated monthly benefit is $2,500, her life expectancy is age 90, and her child was born 01/03/2014. For simplicity, we are not assuming inflation.
Claiming Benefits Early at Age 62
Her short life expectancy would be to age 80, and her cumulative benefits would be $591,923.
Her given life expectancy would be to age 90, and her cumulative benefits would be $810,671.
Her long life expectancy would be to age 100, and her cumulative benefits would be $1,029,419.
Claiming Benefits at Full Retirement Age (FRA): 66 and Six Months
Her short life expectancy would be to age 80, and her cumulative benefits would be $538,750.
Her given life expectancy would be to age 90, and her cumulative benefits would be $838,750.
Her long life expectancy would be to age 100, and her cumulative benefits would be $1,138,750.
Delaying Claiming Benefits Until Age 70
Her short life expectancy would be to age 80, and her cumulative benefits would be $465,250.
Her given life expectancy would be to age 90, and her cumulative benefits would be $849,250.
Her long life expectancy would be to age 100, and her cumulative benefits would be $1,233,250.
I would like to point out a few observations from the example and charts. You will notice that in each case, as we discussed earlier, the benefits for children do not start until you actually file and are receiving benefits. You will also notice that in each instance the monthly benefit increases as you wait until FRA and age 70 to start receiving benefits, however the benefit for children the stays the same at $1,250. What does change is the year the benefit for children starts. The benefit stops in all three instances when the child reaches age 18 in 2032.
Even more so than the other examples, your life expectancy may be a huge determining factor on what strategy you should choose. If you only live until age 80, it would make sense to file for benefits early at age 62. Your cumulative benefit would be $591,923, and if you decided to delay until age 70 and you happen to pass away suddenly at age 80, you would have only received $465,250. That is over a $126,673 difference.
This is one of the more complex Social Security rules. I know what you are thinking: Joe, I have read a bunch of your other articles, and it is all complicated, LOL. That is true I guess, but this one is even more complicated. Plus, I should be making things easier for you. If I am, contact me please.
Back to the family maximum. Essentially, the family maximum limits the total benefits payable to a beneficiary family. Typically, the maximum family benefit is 150 to 180% of your primary insurance amount.
As you can see from the highlighted portion, “Wanda Worker’s” family maximum is $2,908 per month, or roughly 173% of her primary insurance amount of $1,680. Pull out your benefit statement and see what your number is. Better yet, go online and view your my Social Security account, just click on the Estimated Benefits tab, next to Overview and you will see it listed about halfway down the page under the Survivors section.
Get Your Account Started!
Haven’t set up your my Social Security online account? What are you waiting for (LOL)? Don’t worry. ☺ Here is a step-by-step video tutorial I created just for you. What are you waiting for? Watch the video and set up your account now, please!
Additionally, if you want a comprehensive review, please take a look at our Social Security Solution Program. I put this program together from the feedback I have received from clients and readers of Social Security Teacher.
This solution is designed specifically for those of you who want help and guidance in making the best decision for you and your family. I am a CERTIFIED FINANCIAL PLANNER™ professional, and have the experience to help you get there.