When discussing Social Security, children may not be the first group that comes to mind, but perhaps they should be. In 2017, the Social Security Administration (SSA) reported distributing $2.6 billion monthly to assist 4.2 million children whose parents are either disabled, retired, or deceased. Recently, I’ve observed an increasing number of cases where older individuals have young children, whether through marrying younger spouses or adoption.

Children’s benefits are one of the family benefits provided by the SSA, alongside spousal and ex-spousal benefits. Although survivor benefits are often thought of as a family benefit, they are classified separately. For any family members to qualify for these benefits, one spouse must already be receiving Social Security benefits, unless the individual is an independently entitled divorced spouse.

Modern advice often suggests delaying Social Security benefits to maximize the amount you receive. However, having young children can be a valid reason to consider taking benefits earlier. There are two types of benefits related to a worker’s Social Security that can be claimed by family members with children:

1. Children’s benefits are provided to a child’s representative until the child turns 18, or 19 if still in high school, or if the child is disabled before reaching age 22. In some cases, stepchildren, grandchildren, step-grandchildren, or adopted children may also be eligible for benefits.

Unlike other benefits, there is no penalty for claiming children’s benefits early, and no deeming rules apply. Both types of benefits are set at 50% of the worker’s primary insurance amount. The only potential reduction to these benefits comes from the family maximum calculation, which will be covered later.

2. Child-in-care benefits, also known as “child-in-care” spousal benefits, can be a bit confusing due to the terminology. This benefit is essentially the same as the standard spousal benefit but is available to spouses of any age. Normally, to qualify for spousal benefits, one must be at least 62 years old, but this is not a requirement for child-in-care benefits. To be eligible, the spouse must be caring for a child under the age of 16, and the working spouse must already be receiving benefits.

These benefits are available to spouses who do not qualify for regular spousal benefits. To qualify, the spouse must be responsible for a child under 16 years of age, or a disabled child who became disabled before the age of 22.

Benefits According to Marital Status

Now that you’re familiar with the available benefits, let’s explore how they apply to different marital situations.

Single

• The individual must be receiving benefits.
• Not eligible for a “child-in-care” benefit, as there is no spouse.
• Children’s benefits amount to 50% of the primary insurance amount.

Married

• Couple need to be married for a minimum of one year.
• Spouse 1 must be receiving benefits.
• Spouse 2 must be the parent caring for a child under 16 or a disabled child.
• Only one child-in-care benefit is available, regardless of how many children under 16 are in the household.
• This benefit ends when the youngest child turns 16. If there are multiple children under 16, the benefit stops when the last child reaches that age.
• The child-in-care benefit for Spouse 2 is 50% of Spouse 1’s primary insurance amount.
• Children’s benefits are also 50% of Spouse 1’s primary insurance amount.

Survivor Benefits

• This follows the same structure as the Married/Spouse scenario, but the benefit equals 75% of the deceased spouse’s primary insurance amount.

Ex-Spouse

• The child-in-care provision, which permits a spouse under the age of 62 to collect benefits, does not apply to divorced spouses. To claim benefits on an ex-spouse’s record, including the child-in-care benefit, a divorced spouse must be at least 62 years old.

Benefit Limitations

It’s important to be aware of additional limitations that apply to the benefits mentioned earlier:

One such limitation is the annual earnings cap. Beneficiaries in receipt of children’s or child-in-care benefits are subject to this limit. For example, in 2018, if a beneficiary’s earnings surpass $17,040, their benefits will be reduced by $1 for every $2 they earn above this threshold.

The second limitation is the family maximum, a somewhat complex calculation that caps the total benefits paid based on one worker’s primary insurance amount. This cap typically ranges from 150% to 180% of the worker’s primary insurance amount. For example, if the primary insurance amount of spouse no. 1 is $2,000, and the family maximum is set at 170%, the total allowable benefits would be $3,400.

Spouse no. 1 will always receive their primary worker benefit first, which in this example is $2,000. This leaves a remaining amount of $1,400 to be shared among all other beneficiaries. If any of the beneficiaries becomes ineligible, such as by graduating from high school, the $1,400 can be redistributed to the other eligible beneficiaries.

The family maximum is based on the worker’s primary insurance amount, no matter when the worker begins claiming benefits. If spouse no. 2 is eligible for spousal benefits and that amount exceeds the child-in-care benefit, the spouse will receive the higher benefit. The spousal benefit will also be factored into the allocation of the remaining $1,400. This amount will be divided proportionally among the beneficiaries.

These benefits may offer some financial relief during challenging times with children. Understanding the details of Social Security can help you make the most of available benefits, ultimately enhancing your financial well-being.