Most financial advisors and their clients think of Social Security in terms of a retirement benefit. Social Security offers other benefits including benefits for dependents. They can be critical for some clients, and financial advisors should be aware of these benefit options so they can provide advice and direction as needed.
Benefits for Children
Children can qualify for a benefit as the survivor of a deceased worker or as the dependent of a parent who is living and receiving Social Security retirement or disability benefits. Children need to be:
- Under the age of 18, or
- Under the age of 18 if they are a full-time student in no higher than the 12th grade. If they are 19 and still in school, benefits will continue until the earlier of the date of graduation or two months after their 19th birthday.
- Be 18 or older and suffer from a disability with an onset that occurred no later than age 22.
Benefits paid for a child will not decrease a living parent’s retirement benefit. The value of the benefits the child receives, added to the parent’s benefits, may help a person decide if taking benefits sooner may be more advantageous. If the parent is deceased, dependent children can receive up to 75% of the worker’s benefit, calculated as a percentage of the benefit that the worker would have received had he or she continued working until retirement. (See also: Social Security Benefits for Children: How They Work.)
Family Benefit Maximums
There is a limit to the amount that Social Security will pay to a single family. This total depends on the worker’s benefit amount and the number of family members who also qualify on their record. It varies, but generally, the total amount a worker and their family can receive is about 150% to 180% of the worker’s full retirement benefit. (See also: Social Security Disability Benefits for Children with ADHD.)
A few individual benefit levels include:
- A dependent or disabled child would receive a benefit of 75% of the worker’s benefit if the worker has died.
- The child’s benefit would be up to half of the worker’s benefit if they are receiving retirement or disability benefits.
- Dependent parents of a deceased worker who are 62 or older would receive 82.5% of the worker’s benefit for one parent or 75% each for two parents.
Benefits for Surviving Spouses
Much has been written about survivor’s benefits in the context of benefits for widows or widowers who receive a benefit based on their late spouse’s earnings record upon their death. To receive these benefits, you must have reached your full retirement age (FRA), which is 66 years and two months for people born in 1955, and the FRA will gradually rise to 67 for those born in 1960 or later. The survivor's benefit for those who have reached their FRA is 100% of their deceased spouse’s benefit, though they can opt to receive their own benefit at any point if that is more advantageous. For those who are at least 60 the benefit ranges from 71.5% to 99% of their deceased spouse’s benefit. (See also: How do Social Security Survivor Benefits Work?)
The surviving spouse is also eligible for a survivor’s benefit if they are at least age 50 and disabled, as long as the disability started before the worker’s death or within seven years of their death. A disabled widow or widower aged 50 to 59 would receive a benefit of 71.5% of their late spouse’s benefit.
A younger widow or widower can collect a benefit if they are caring for a minor child of a deceased worker. The surviving spouses cannot remarry and must not qualify for retirement benefits based on their own earnings record or be collecting survivor benefits based on their deceased spouses’ contributions. The surviving spouse can qualify for up to 75% of their late spouse’s benefit if they are caring for a child under the age of 16 or who is disabled and receiving dependent benefits based upon their late parent’s earnings record. If the surviving spouse remarries their benefit as the caregiver of the deceased spouse’s child stops.
Benefits for Grandchildren
If grandchildren become dependents of their grandparents due to the death of their own parents or other reasons, they can be eligible to receive benefits based upon their grandparent’s earnings record. Great grandchildren do not qualify for dependent benefits, however. (See also: How You Can Help Clients With Social Security.)
Benefits for Disabled Children
Disabled children are covered under Social Security, but the application process to obtain these benefits can be arduous. Social Security says that the child must have a physical or mental condition that severely limits their activity and is expected to last more than one year and/or result in the child’s death. The child must meet Social Security’s definition of disability and their family must have little or no income or resources. Social Security considers the family’s household income, their other resources and other factors in making their determination.
The Bottom Line
Financial advisors generally focus on helping clients make the best decision about claiming their Social Security retirement benefits as part of their retirement planning advice. Social Security also offers dependent benefits under several scenarios, and these benefits can be quite beneficial to eligible clients. (See also: Tips on Delaying Social Security Benefits.)