Little-known Social Security perk offers relief to older Americans with kids

A little-known benefit for retirees with younger children is getting some attention.

The Social Security Administration pays a benefit to minor children of retirees, shocking older parents who had no idea the payment existed, according to the Wall Street Journal.

“These benefits provide necessities for eligible family members and help make it possible for those children to complete school,” the administration notes in a benefit explanation document.

The payment is an important one, as the number of those 65 and older with children has more than tripled since 2000, the Journal said.

While the child payments can bring a family hundreds of extra dollars a month, it has limitations.

The benefit pays out to children in two categories – those with a parent receiving a benefit and those with a deceased parent who received benefits.

In the first case, the child can receive up to half of what their parent gets. In the second case, the limit increases to 75 percent, according to Social Security Administration rules.

The benefit stops when the child turns 16, but that age goes up to 18 if the child has a disability.

While the benefit has been around since 1939, its existence still shocks some parents.

Del Mar, California resident Betty McDonald, 69, who spoke with the Journal about the benefit, said she and her husband John Bonadeo were “floored” when they found out about it.

McDonald and Bonadeo have six children under 18, meaning multiple children may be eligible for a payment.

But there are limits to how much the Social Security Administrations pays to dependent children of retirees. That limit is called the “maximum family payment.”

“The maximum family payment is determined as part of every Social Security benefit computation,” the administration notes.

Generally speaking, the total amount paid to a family cannot be more than 150 percent to 180 percent of the parent’s full benefit amount.

If two parents have a $6,000 benefit, the max their family could receive is $8,800.

Should a family’s total payment exceed the limit, then the administration reduces the children’s benefits proportionately.

“We do not reduce the parent’s benefit amount because it’s not part of the maximum allowable amount,” the administration says.

The benefit could be a financial make or break for the tens of thousands of retirees with minor children.

Some 48 percent of Americans say they worry outliving their retirement savings, according to an April study from financial firm Northwestern Mutual.

And, those expecting to retire in the next six years could face an unwelcome surprise.

The Social Security is on track to deplete a key funding source by 2032 – benefit amounts could fall by as much as 22 percent if that happens, according to the Social Security Board of Trustees, the group that oversees the trust accounts that help fund benefit payments.