Understanding Social Security Benefits for Children
There are millions of children in the United States receiving Social Security benefits. In 2017, a whopping 4.2 million1 children were receiving benefits. The total for these benefits? Over $2.6 billion each month.
As large as those numbers sound, there are actually many more children that are eligible for these benefits but are not actually receiving them. And this isn’t because the benefits are difficult to receive, but rather, most people have no idea their children are eligible, so they don’t know to apply.
How Do Children Qualify for Benefits?
First, you must have a working parent or parents (or in some cases, working grandparent) for a child to become eligible to receive Social Security benefits. Should either parent retire, die, or become disabled, Social Security would begin replacing part of his or her monthly earnings. Once you or your qualifying spouse begins to receive Social Security benefits, your unmarried child can also begin receiving them, so long as they are:
- Under 18 years old; or
- Between 18 and 19 but still in school as a full time student; or
- Age 18 or older and severely disabled with a disability that began before age 22
So long as these rules are followed, some dependent grandchildren could also be eligible. You can read more about social security benefits for grandchildren here https://www.ssa.gov/OP_Home/handbook/handbook.03/handbook-0325.html.
How Much Do Children Receive?
Qualified children with disabled or retired parents will be eligible to receive up to 50% of their parent’s full retirement age benefit. Should the parent die, the child will then be eligible for up to 75% of the parent’s full retirement age benefit.
But just because a child may be qualified to receive a certain percentage, there is a maximum limit that the Social Security Administration will pay to the family as a whole, which can affect how much the eligible child receives. This is called the Family Maximum Benefit, and it is computed based on a worker’s Primary Insurance Amount (PIA), which is explained further here https://www.ssa.gov/OACT/COLA/Benefits.html#PIA. The 2020 formulas for calculating these benefits are as follows:
- 150 percent of the first $1,226 of worker’s PIA, plus
- 272 percent of worker’s PIA over $1,226 through $1,770, plus
- 134 percent of worker’s PIA over $1,770 through $2,309, plus
- 175 percent of the worker’s PIA over $2,309
Keep in mind, if there is a divorced spouse receiving benefits from an eligible worker’s work record, it will not be counted towards the family benefit maximum.
It should also be noted that a child receiving social security benefits is subject to earnings limits, just like anyone else who is working while collecting. The child’s wages will only affect their benefits though, and not the worker’s benefits or other beneficiaries.
Filing Early vs. Delaying Benefits
Remember, a child cannot begin receiving Social Security benefits unless their guardian is collecting. Many times, workers will choose to delay their benefits in order to collect more money at their full retirement age or older. But for those who have children at home, filing early may make more sense.
Because of this, it’s crucial that workers examine their personal household needs to see what claiming strategy makes the most sense. We highly recommend that anyone who will be collecting Social Security, with or without children, talk to a knowledgeable financial advisor first.
1Social Security Administration "Benefits for Children" Publication No. 05-10085, https://www.ssa.gov/pubs/EN-05-10085.pdf