Social Security “Two-for-One”
When you start receiving Social Security retirement benefits, some members of your family may also qualify to receive benefits on your record. If they qualify, your spouse or child may receive a monthly payment of up to one-half of your full-retirement age (FRA) benefit amount. These payments will not decrease your retirement benefit. In fact, the value of the benefits your family may receive, added to your own, may help you decide if taking your benefits sooner may be more advantageous.
Eligibility Rules for Children
The following information about eligibility is a quote from the Social Security Administration (SSA) Web site. (For details please see http://www.socialsecurity.gov/pubs/EN-05-10085.pdf )
When you qualify for Social Security retirement benefits, your children may also qualify to receive benefits on your record. Your eligible child can be your biological child, adopted child or stepchild. A dependent grandchild may also qualify. To receive benefits, the child must:
- be unmarried; and
- be under age 18; or
- be 18-19 years old and a full-time student (no higher than grade 12); or
- be 18 or older and disabled from a disability that started before age 22.
Normally, benefits stop when children reach age 18 unless they are disabled. However, if the child is still a full-time student at a secondary (or elementary) school at age 18, benefits will continue until the child graduates or until two months after the child becomes age 19, whichever is first.
Comparing Early versus FRA Social Security Benefit Retirement Strategies
As stated earlier, benefits paid for your child will not decrease your retirement benefit. In fact, the value of the benefits he or she may receive, added to your own, may help you decide if taking early retirement may be more advantageous. The following two scenarios illustrate this concept:
A 62 year-old single parent with a 14-year old child with a FRA of 66 and monthly FRA benefit of $1,000. If this single parent retires at 62 he or she can collect $750 per month and the child can collect 50 percent of the FRA benefit of $500 for a total of $1,250. The $1,250 can be collected for four-years until the child is 18.
A 62 year old single parent with a 14-year old child with a FRA of 66 and monthly FRA benefit of $1,000 waits until FRA to begin benefits.
Deciding Which Social Security Strategy is Best
The break-even age of Scenario #1 and Scenario #2 is 78. Therefore if the single parent does not expect to live beyond age 78 (due to health problems or other issues) he or she should take advantage of Scenario #1 and collect the the child’s benefit for four years.
The SSA states that it is important to keep in mind that there is a Family Maximum. The total varies, but generally the total amount you and your family can receive is about 150 to 180 percent of your FRA benefit. For more information about the Family Maximum amount see an earlier blog at http://kathleensindell.com/blog-writing/excerpt-from-social-security-maximize-your-benefits-9 .