More retirees rely on Social Security: AARP
As the Social Security system turns 90 years old, 65% of retirees rely on it. Surveys show that public confidence in its future continues to decline.
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Experts say elderly parents have access to a little-known Social Security benefit that could potentially maximize their total lifetime benefits.
If you’re 62 or older, you may be able to claim Social Security and dependent child benefits even if you haven’t yet reached age 67 or FRA. This allows your child to receive half of their full retirement age (FRA) benefit in the form of a monthly check.
According to the Social Security Administration (SSA), only 1% of Social Security recipients in January were children of retired workers, collecting an average of $919.20 per month. But government data shows the number of children born to women over 45 has soared by 450% since 1990. Alternatively, if elderly parents have young children, it could be the result of a so-called May-December marriage, experts say.
In any case, more people may soon become eligible for this benefit. There’s a lot to consider when deciding whether such a move is right for you, but some families choose it and say it also helped them save for their child’s college education.
“We get more calls about this than any other topic because it’s not advertised by Social Security, so people just stumble upon it by chance,” said Michael Luger, managing partner and chief investment officer at Greenbush Financial Group. “If the child is young, the amount can be very high.”
How do Social Security dependent care benefits work?
You are eligible if:
- You are 62 or older and eligible for Social Security
- Your child is unmarried and under 17 years of age, or is 18-19 years old and attending school full-time, or has a disability that began before age 22 years.
If you claim Social Security before FRA, you’ll receive less Social Security each month if you fall below FRA for the rest of your life, but your child can start receiving half of the FRA amount until age 18 (or in some cases, age 19).
What if I have multiple children?
If the total amount for all children exceeds the family limit, which is approximately 150% to 180% of the parent’s FRA amount, SSA will reduce each child’s benefits proportionately until the total equals the maximum allowable amount. Parents’ benefits do not count toward the family limit and are therefore not reduced.
example:
Your parent’s FRA is $1,700 per month, but if you claim Social Security at age 62, your benefits will be reduced to $1,200. Assume the family limit is 150% of FRA, or $2,550, and four children qualify.
If each child received half their FRA, $850, their monthly total would be $4,600, exceeding the limit by $2,050.
SSA applies a family limit of $2,500 and subtracts the parent’s FRA of $1,700 for $850. Split that $850 among your four children, making each child $212.50 per month.
Can I continue working?
You can work, but be aware of the SSA work penalty. In 2025, if you qualify for FRA, your benefits will be reduced by $1 for every $2 of income you earn above $23,400. In the FRA year, your deduction is reduced by $1 for every $3 you earn above $62,160, and the reduction ends in the month you reach your FRA. Once you reach your FRA, the reduction is paid back over time to slightly increase your monthly benefits.
“People make the mistake of thinking they’ll take what’s mine but won’t touch my child’s stuff,” Luger said. “That’s not true. Child benefit is also listed on your employment history, so they’ll pursue it. If you earn too much, you’ll get it all back because of the earned income penalty.”
Is it worth claiming Social Security dependent care benefits?
Advisers say it depends on each person’s circumstances.
“If you’re over-retirement planning and have the funds, when you enroll in Social Security doesn’t really matter,” said Andrew Wood, a retirement planning advisor at Daniel A. White & Associates. “But if you’re short on funds, increasing your Social Security benefits can improve your outcome. While it may be tempting (to claim benefits), claiming early can have a negative impact on your retirement 10 to 15 years later because you’ll pay less.”
Other advisers said advocating for the move could increase overall savings.
example:
FRA Social Security for one parent is $2,500 per month, or 30% less to $1,750 if enrolled at age 62. I have two children, ages 8 and 5.
- If a parent claims at age 62, here’s what happens (excluding annual inflation adjustments):
- At age 62: $1,750 (parent) + $1,250 (child 1) + $1,250 (child 2) = $4,250 per month ($51,000 per year)
- At age 72, $1,750 (parent) + $0 (child 1, dropped out at age 18) + $1,250 (child 2) = $3,000 ($36,000)
- For age 75, $1,750 (parent) + $0 (child 1) + $0 (child 2, dropped out at age 18) = $1,750 ($21,000)
Over 13 years, that’s a total of $618,000 in Social Security benefits ($273,000 for parents + $150,000 for child 1 + $195,000 for child 2).
At age 90, the parents would have received an additional $315,000 ($21,000 per year), bringing the family’s total lifetime Social Security payments to $933,000.
- If parents wait until FRA age 67, their lifetime Social Security benefits will total $840,000 at age 90.
Other considerations, according to Luger, include:
- Children’s money is tax-free. They likely won’t earn enough to pay federal taxes, and most states don’t tax Social Security.
- Children can be claimed as dependents on your taxes.
- The second parent can continue to work as usual without affecting family benefits.
- Parents can save and invest their child allowance. Make sure the account is only in your child’s name so SSA can’t claim the remaining money back later. “If you don’t need the money, you can use it to plant seeds for the future,” he says.
- Approximately 20% of a child’s savings is eligible for need-based financial aid. “This is not the end of the world…it’s free money from Social Security that can be used to pay for college,” Lugar said.
Medora Lee is USA TODAY’s money, markets and personal finance reporter. Please contact us at mjlee@usatoday.com. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
