The Savings Game: Social Security benefits for children

If you have a large family, it is critical that you understand family benefits if you want to maximize your Social Security benefits for your family.

If a worker receives a Social Security retirement or disability benefit, certain family members are also eligible for payments. Eligible family members may include spouses, certain former spouses and certain children. Payment amount is a percentage of the worker’s full benefit amount, also termed the primary insurance amount” or PIA. A family maximum limits family payouts. Important rules follow:

— A family benefit will be paid unless you (the family member) are eligible for a higher benefit on another work record, including your own. If you are dually eligible, eligible in two ways, as a family member, and a worker in your own right, you are generally paid the higher of the two benefits.

— For you to get a family payment on a worker’s record, the worker must be getting his or her own Social Security Social benefit or disability payment.

— You must be retired. This means that your earnings must meet the same limits as those used for other Social Security benefits.

In a recent article in the Wall Street Journal, written by Dalvin Brown, the Social Security benefit for children who have not reached age 19 was discussed. Older retirees who have dependent young children are able to file for benefits for their dependent children. Many parents who have dependent children are not aware of this Social Security benefit.

This benefit is computed as up to half of the full-retirement age of the parent until the child reaches 18, or 19 if the child is still in high school. The number of families headed by someone older than 65 with a child under 18 has more than tripled between 2000 and 2024 to approximately 400,000 families, according to census data.

The regulations do not make a distinction between natural-born and adopted children. So, even if you are retired, and you have adopted children under the age of 18, these children are eligible for Social Security benefits, subject to family limits. Hundreds of thousands of kids draw on retired workers’ benefits, according to Social Security data.

The family maximum benefit is computed regardless of how many children are in a family unit. The family maximum is generally between 150% to 188% of the parents’ full benefits, and the parents’ benefits count first.

According to Laurence Kotlikoff, a Social Security expert, among workers ages 45 to 62, more than 90% of families would maximize the total Social Security benefits if the workers waited to age 70 before filing for benefits. According to Kotlikoff, “the longer you live, the more it typically makes sense to wait to collect.”

Bottom line: When you have a large family, and there are several children who have not reached age 18, it becomes very complicated to determine the most advantageous ways to maximize family benefits, and when it makes the most sense to file for your Social Security benefits. If you have not already filed for your Social security benefits, I would suggest that you discuss your alternatives with a certified financial planner before you make a decision.

If you have already filed for your benefits, and have dependent children under age 18 who are not receiving Social Security benefits, file for them. This will not impact your own Social Security benefits.

Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.