There is a little-known Social Security benefit that about 714,000 people receive each year. It’s not retirement, disability, survivor or spousal benefits either. No, these are Social Security benefits for children of retired workers.
“Not many people understand that children can receive Social Security,” says Rafael Rubio, president of Stable Retirement Planners in Southfield, Michigan.
If they do, they may think of those payments in terms of survivor benefits, which are given to children after a parent passes away. However, all minor children of retired workers collecting Social Security are entitled to receive monthly payments based on their parent’s benefit amount.
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Social Security Benefits for Children of Retirees
Only 1% of Social Security beneficiaries are children of retired workers, according to December 2024 data from the Social Security Administration. They received an average benefit amount of $918 in that month.
Government birth records show that in 2022, the number of children born to women age 45 and older increased 12% from the previous year. This means that more children may be eligible for these benefits in the future.
It isn’t just children born to older parents who may be eligible, though. In some cases, a younger parent may marry someone older, according to Barbara Taibi, tax partner in the private client services group at Eisner Advisory Group in Iselin, New Jersey.
Children are entitled to receive half their parent’s monthly Social Security benefit. If both parents receive retirement benefits, the child will receive an amount equal to half the higher wage earner’s payment amount. If multiple minor children are in the household, each can receive their own benefit, but their payments may be prorated so they do not exceed a household maximum. That maximum, Taibi says, is typically 150% of a retiree’s benefit amount.
“If they are eligible, go ahead and take it,” Rubio says. He explains that the child’s benefit does not affect how much the parent will receive.
Benefits will stop once a child reaches age 18, although they can continue until age 19 if the child is still enrolled full time in elementary or secondary school. A child who becomes disabled before age 22 may receive benefits longer.
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No Restrictions on Use of Money
Social Security benefits for children arrive with no restrictions or spending requirements.
“It’s additional income for the household,” says Keith Fenstad, vice president and director of wealth planning at Tanglewood Total Wealth Management in Houston. However, he adds that it must be used for the benefit of the child.
What benefits the child can be broadly defined. Some parents might use the money for school tuition, housing or groceries. Meanwhile, other parents may put the money away in custodial brokerage accounts that are passed to children once they reach the age of majority.
Since the benefits are for the child, a parent doesn’t claim this money as income on their tax return. Instead, it must be listed on any return filed by the child.
“This could be the only income a minor child has,” Taibi says. In that case, it is unlikely to be taxable. However, a child with investment income or a job may find that a portion of their benefits becomes subject to income tax.
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Consider Children’s Benefits When Claiming Social Security
A child’s benefits can only begin once their parent has begun receiving retirement benefits. If a parent claims Social Security before their full retirement age, both their benefit and their child’s benefit will be reduced. However, claiming early for a reduced amount could still mean some families come out ahead financially.
“It might depend on how young the kids are,” Fenstad says. Claiming early so a child can receive a decade of benefits may make more sense than taking a reduced benefit if you have older children. “You want to be sure you do the math,” Fenstad advises.
Whenever you start benefits, it is up to you to also claim benefits for your children. “It’s not like Social Security is going to call you and ask you to apply for your children,” Taibi says.
You can apply for children’s benefits at any Social Security office or by calling 1-800-772-1213.
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Don?t Miss This Social Security Benefit for Older Parents originally appeared on usnews.com