This is a subject that I wrote about in my Social Security Retirement Income Planning book, and it just came up again in a discussion with a potential client this week, so I thought I’d make a blog post that “steals” this chapter from it. If you know someone raising children (their own or otherwise) they should learn about this little-known Social Security filing strategy. This short chapter follows here:
“I wasn’t going to include a section in the book on this topic because I thought that it would apply to so few people. But I was doing a Social Security income planning seminar at a local restaurant a few nights ago, and low and behold, an attendee and his wife asked me about it.
So for the relatively few folks who will benefit from these next paragraphs, the extra, unplanned income could be substantial. The gentleman and his wife told me that he was going to be 66 (FRA) in a few months and that she was ten years younger. They have two children still at home (and earning honor grades in high school) who are under the age of 18.
They had heard that there might be some Social Security benefits for their minor children… and what they had heard was correct. Here’s how it works.
Whether the children are natural, stepchildren or even legally adopted grandchildren who live at home and are under the age of 18 (or 19 if still in high school), the children can qualify for Social Security benefits if the parent has filed for their own benefits at age 62 or older.
In fact, this parent can even file and suspend his/her benefit (if still working full time or for whatever reason) so that he can accrue delayed credits until age 70. Or take the benefits.
Each child can get 50% of his PIA until they turn 18. Assuming his PIA is $2,400 – each of the two kids can get $1,200 per month while he (in his own case) files and suspends his own benefits to earn delayed credits. That adds up to almost $50,000! Too bad that his wife is only 56 years old and is too young to claim her spousal benefit as well.
Believe it or not, even Donald Trump’s minor children could qualify for benefits. Born in 1946, if he hasn’t done so already, he could file and suspend his benefits and each minor child would be entitled to a pretty hefty monthly benefit until they reach age 18.
You should know that there is a family maximum benefit that Social Security will give under ANY circumstances. So the “old woman who lived in a shoe” kids would each get pro-rata lower benefits so as not to bring the family over the maximum allowed benefit.
Now if this gentleman who attended my seminar was 62 rather than 66, I would probably not recommend that he claim early Social Security (at the detriment to his own and his wife’s long term Social Security income with COLA’s) in order to get short term benefits for his kids.
And since his wife is so much younger the reduced survivor benefit would make filing early an even bigger mistake. Not to mention that if he was still working at age 62, he would lose $1 of his own benefits for each $2 that he earned over $15,130.
Of course, the most common reason for children’s benefits is for when a parent has died (no matter at what age as long as they had their 40 quarters) based on his PIA. There are many situations and rules regarding children’s benefits and they are beyond the scope of this book. But after meeting this gentleman and his wife, I decided to add this not-so-common circumstance to the book.
Perhaps you may know somebody in this circumstance and might be able to pass along this basic information. Even better maybe they’d like to read the whole book.
It’s only available at Amazon.com here: http://goo.gl/SejKgE
all the best… Mark