Parents who had kids late may be entitled to a Social Security windfall they don’t know about
Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Almost 57.8 million older Americans received Social Security retirement benefits as of August 2026 (1). These benefits become available starting at 62 and provide much-needed income, with around ⅓ of Americans reporting they expect Social Security to be their primary source of support (2).
But while almost everyone knows they can collect retirement benefits, that monthly payment may be just the start of what Social Security offers. In fact, in some cases, additional valuable benefits are available that can be left on the table.
Top Picks
This is especially true for older parents who may be totally unaware that when they retire, their children may actually become eligible for Social Security benefits as well.
The Wall Street Journal (3) recently reported on this often-overlooked source of funds, noting that a growing number of people are likely to become eligible as the number of people 65 and over with a minor child has more than tripled since 2000
Older parents may get a Social Security surprise
The unexpected Social Security windfall that catches many parents off guard is called a child’s benefit.
According to the Social Security Administration (4), millions of young people collect a child’s benefit each month, with this income intended to “provide necessities for eligible family members and help make it possible for those children to complete school.”
A child’s benefit is available to a younger person with older parents if the child is unmarried and:
-
Has a parent who is receiving Social Security retirement or disability benefits.
-
Is either younger than 18, or is between the ages of 18 and 19 and is a full-time student attending an elementary or secondary school in grade 12 or below.
-
Is 18 years old or older and has a disability that started prior to age 22.
Because of this rule, if an older dad with a 14-year-old daughter turns 62 and claims his Social Security benefits, his daughter could collect the child’s benefit for up to five years, depending on when she completes school.
The Wall Street Journal reports that many older parents are unaware of this, with 69-year-old Betty McDonald telling the Journal she and her husband were “floored” to discover that this benefit was available to them.
Social Security survivor benefits are also available to children whose parents are deceased, but more people are aware of this rule, so eligibility for these benefits usually doesn’t come as a surprise.
How much can children collect?
An eligible child who is collecting survivor benefits is entitled to up to 75% of a deceased parent’s standard benefit, while a child whose parents have claimed retirement or disability benefits can collect a child benefit worth up to 50% of the parent’s full retirement or disability benefits, according to the SSA.
However, there is a family limit, which could be anywhere from 150% to 180% of the parent’s full benefit depending on the circumstances. If a family goes over the limit, each person’s benefits are proportionately reduced. However, the parents’ benefit is unaffected by any reduction, since it’s treated as a separate benefit.
Even with this cap, though, some children could receive hundreds of dollars per month or more. For example, say dad’s full benefit is $1,400, and his daughter is entitled to 50% of that amount each month from age 14 to 18. That’s four years of $700 monthly benefits (not including Social Security cost-of-living adjustments that occur most years), or $33,600.
That’s quite a windfall for a family who had no idea this money was coming. Parents and children may want to make the most of it, but with different goals in mind. For a young person, this can paper over essentials as they develop their income, or become the foundation for future investments. For retirees, the money can provide extra security, if necessary.
Save the extra cash
If you weren’t expecting Social Security child benefits, you probably don’t yet have plans for spending the money. So why not save it instead?
You can keep the money in a safe, accessible account in case of an unexpected emergency or to cover extra expenses for your child that you may not otherwise be able to afford.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base rate APY of 3.55% through program banks. With a new client boost and direct deposit incentive, referred clients can earn up to a 4.55% APY.
That’s 10 times the national deposit savings rate, according to the FDIC’s August report.
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8M FDIC Insurance eligibility through program banks.
Spend and invest
The child benefit is meant to help provide for a young person when a parent has retired or become disabled. So there’s nothing wrong with spending some of the money to meet the child’s needs or perhaps even provide some occasional extras.
Of course, spending it won’t improve your long-term financial situation — unless you use something like Acorns, which automatically invests your spare change from every purchase. After signing up, every purchase you make with a linked card is rounded up to the nearest dollar. The difference goes into a portfolio of ETFs or index funds managed by experts at Vanguard, BlackRock, and other leading investment firms.
This can help you feel less guilty about spending because each purchase helps you invest, while using the child benefit to enjoy life today and build a more secure future tomorrow.
Acorns also allows you to set up recurring monthly investments. And if you sign up with a $5 monthly deposit, you can get a $20 bonus investment to get you started.
Get financial help
Since retired parents can use the Social Security benefit to help cover a child’s costs, they will likely be left with more money to build their own security.
If you have a sizable investment portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in planning for your money goals. You just need to answer a few questions about your savings and overall investment portfolio.
From there, WiserAdvisor will review its network of qualified professionals — for free — and match you with up to three vetted, reputable advisors who can help with your specific needs.
Then, just schedule no-obligation consultations with the professionals you have been matched with to determine who is the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties, and specific financial results are not guaranteed.
What To Read Next
Get Warren Buffett’s best investing lessons, free. Join 250,000 readers getting Moneywise’s sharpest money reporting every week. Subscribe and we’ll send you our guide to the ideas that built Buffett’s fortune as a welcome gift.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Social Security Administration (1), (4); Transamerica Institute (2); The Wall Street Journal (3)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.