This may come as a surprise to many, but if you are eligible to collect social security retirement benefits and you still have a dependent child, your child may also qualify for benefits. That includes President Trump’s son Barron, whether he needs the money or not. But for others, this can be a welcome lifeline in a financially tricky period in their lives.
Social Security provides benefits to a dependent child when a parent claims either retirement or disability benefits. To be eligible, a child must be unmarried and under age 18, or 19 if still a full-time high school student. The child can be your own, a legally adopted child, a stepchild and, in some cases, a grandchild if the child’s parents are deceased or disabled and the child is your dependent.
The child’s benefit is based on 50% of the parent’s primary insurance amount at full retirement age. Even if you claim a reduced benefit early or larger benefit by delaying benefits to age 70, the child’s benefit is still based on half of the parent’s full retirement benefit.
Let’s take a closer look at President Trump’s situation, just for kicks.
President Trump, 71, was born June 14, 1946, and has been eligible for full Social Security retirement benefits since 2012. Let’s assume, for this thought experiment, that he paid the maximum in Social Security taxes over his lifetime, so in 2012 his full retirement benefit would have been about $2,700. This means that his son Barron, born in March of 2006, now 11, may receive a benefit equal to half of his father’s Social Security benefit, totaling $1,350 per month. Also, in this case, First Lady Melania Trump would be eligible for benefits for what is known as having a “child in care.” As long as Barron (and any other children they may have) is under 16 and receiving benefits off President Trump’s record, she is eligible for this benefit.
One important moderating factor is that these benefits cannot exceed what is known as the “Maximum Family Benefit” or MFB. The MFB is calculated in a similar way to how they come up with your full retirement benefit and can be found on your Social Security statement. Generally, MFB is 150% to 180% of a worker’s full retirement benefit. In cases where the total exceeds the MFB, the worker’s benefit stays the same and the spouse’s, and children’s benefits are reduced proportionately.
There are also benefits for children if a parent becomes disabled or dies prematurely. Let’s take a look.
If a parent becomes disabled and unable to work, the children may be entitled to Social Security benefits in the same manner. Benefits for the children are similar to those for retired workers discussed above. The child may receive 50% of the worker’s full retirement amount and is also subject to the family maximum.
Unfortunately, another common reason for children to receive Social Security benefits is that a parent has died. Each child would be eligible to 75% of his parent’s maximum Social Security benefit not to exceed the maximum family benefit. Children of deceased workers make up more than 40% of all minors receiving Social Security benefits.
John is killed in an automobile accident when he is 47. He leaves behind a wife and three children. Let’s assume he earned the Social Security the Social Security maximum since age 22. (This is the amount of income you and your employer pay Social Security taxes on. In 2017 it is $127,200) Using a Social Security calculator, his full retirement amount would be $2,322 per month. This means each child and his widow Mary would be eligible for $1,741 per month. However, if we add these up, we find that the total ($6,964) would exceed the family maximum, which in this case is $4,064 (also determined by the calculator), so that’s the amount they will receive instead.
The children’s benefits would be paid until each child is age 18. Even if Mary is fully able to support the children, or if she remarries, the children may continue to receive their Social Security benefits based on their father’s earning record.
Rules for children’s benefits
- A child is always deemed dependent on his parent (mother or father). The fact that the parent and child are not living together, or the parent is not contributing to the child’s support, is not a factor unless the child has been adopted by another person.
- Note the benefit of a retired or disabled worker’s child is 50% of the primary insurance amount versus 75% for a deceased worker’s child
- It is not necessary for the mother and father to have been married for a child to be entitled to benefits. The main criterion is that the child is dependent on the worker.
- Children’s benefits are generally paid to a representative payee, such as a parent or custodial relative.
- A child is considered dependent on a stepparent if the stepparent is contributing at least one-half of the child’s support, or the child is living with the step-parent.
- A child receiving benefits on a step-parent’s record will stop receiving such benefits if the marriage between the parent and step-parent ends.
- A child can lose some or all of the benefits if they work and earn over $16,920 annually in 2017.
- If the worker loses his benefits (e.g., a disabled worker becomes able to work again), the child loses their benefit.
- Benefits end when a child turns 18 (19 if still in High School) or if the child marries.
Steven C. Johnson, ChFC, a financial planner with AspenCross Wealth Management, has helped many clients over the past 27 years maximize their Social Security retirement income benefits. Steve is a well sought out speaker for numerous private and public corporations, educational institutions, and social and fraternal organizations on the topics of Social Security and Retirement Income Planning. Need help maximizing your Social Security retirement income? You can schedule a complimentary consultation by clicking here.