Are you missing out on this little known Social Security Benefit?
Many people are unaware of a VERY valuable Social Security benefit available for retirees with minor children that can earn them over $100,000! Let me explain how this works, using a scenario from a retirement optimization workshop that I recently held with a man I’ll call Bill.
Case Study
Bill is a 64-year-old retiree currently collecting Social Security benefits which total $2,500 per month. His full retirement age is 66 years and 8 months, with a full retirement benefit of $3,000 per month. Bill has a 13-year-old biological son and a 10-year-old stepson who is a dependent.
When Bill shared with me that he has been losing sleep at night, worrying how he will pay for his son and stepson’s college educations, I told him about a substantial but frequently overlooked benefit from Social Security.
As a retiree currently collecting Social Security, Bill is entitled to claim monthly payments for his minor children, without affecting the amount of Social Security he receives. Each of Bill’s two minor children can receive monthly payments of up to 50% of Bill’s full retirement benefit.
Bill’s 13-year-old biological son will receive $1,500 per month for five years, from the time Bill applies (his son’s age is 13 years and two months) until his son turns 18, totaling $87,000.
Bill’s 10-year-old dependent stepson will receive $1,500 per month for eight years, from the time Bill applies until his stepson turns 18, totaling $144,000.
Wow!!! This will be an enormous help to Bill and his family!!!
Who is eligible?
To take advantage of this benefit, you must meet the following requirements:
The parent must be 62 years old or older, and eligible for Social Security
The parent must already be collecting Social Security or be planning to apply for their own Social Security at the same time they will apply for the minor
The child must be unmarried and must meet be:
Under the age of 18, or
Age 18 or 19 and a K-12 student, or
Age 18+ with a disability that began prior to age 22
How much could my child receive?
Each eligible child can receive a monthly payment of up to 50% of the parent's full retirement benefit, with a maximum family benefit of three children receiving monthly payments totaling 150% of the parent’s full retirement benefit.
What about grandchildren?
Dependent grandchildren may also be eligible, but there are different rules. Refer to AARP and Social Security Administration for more information.
How do the payments work?
Monthly payments continue up to the child's last eligible birthday, and can be deposited directly into the child’s account, such as an UTMA (Uniform Transfers to Minors) or UGMA (Uniform Gifts to Minors) account. The account must be owned by the minor. When the minor reaches either age 18 or 21, depending on the state, the money becomes theirs.
What can this money be used for?
These funds can be used for a variety of purposes, including:
Saving for college (with considerations for potential drawbacks — see video below)
Living expenses
You should always check with Social Security, to ensure that you are following all their rules.
How do I apply for Social Security benefits for my child?
It’s not possible to apply for these benefits online. Instead, call Social Security at 800-772-1213 or schedule an appointment with your local Social Security office. Have these documents on hand:
Child's birth certificate or other proof of birth or adoption
Proof of marriage to the child's natural or adoptive parent if they are your stepchild
Proof of the child's U.S. citizenship or lawful alien status if not born in the U.S.
W-2 forms and/or self-employment tax returns if the child had earnings last year
If the parent is deceased, proof of the parent's death
Watch this video!
This 10-minute video is a must-watch before you apply. Turn on Social Security at 62 and Your Minor Children Can Collect the Dependent Benefit.
Additional Information from Social Security Administration
NOT FINANCIAL ADVICE
The information contained in this article is for informational purposes only and shall not be understood or construed as financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be.
