Question: Can Children Receive Social Security Benefits?
Answer: I often get questions from financial professionals regarding the rules for children accepting social security benefits. The answer is that children can receive benefits in a couple of ways.
Talking with Families: Financial professionals and families alike often don't realize what benefits are available for children—leaving money on the table when they need it the most. When a spouse dies, the children can receive social security benefits. Benefits can be a game changer if a grandparent or adoptive parent has to take over parenting duties unexpectedly.
Photo by GiovannyFirst, if one parent dies, the child is entitled to 75% of that parent's death primary insurance amount (PIA). It's worth noting that if multiple children accept the benefit, the amount may be lower. This situation is called the family maximum and comes into play if the combined full-benefit amounts exceed the family maximum allowed. Each child receives this survivors benefit until they graduate from high school or reach age 19, whichever happens first.
It's up to the surviving parent or legal guardian to let Social Security know the child graduated. Once notified, Social Security stops future payments. Families can't outsmart Social Security by not telling them. Once they learn the truth, they'll immediately stop payments and require repayment of every month that money shouldn't have been received.
Second, a child can receive benefits via a parent or legal guardian who's currently taking social security benefits or social security disability benefits. While there are many situations with parents receiving disability benefits, the number of grandparents or adoptive parents becoming legal guardians is rising.
If a grandparent receives social security benefits and is the child's legal guardian or adoptive parent, then the child becomes eligible for benefits. The child will receive 50% of the guardian/adoptive parent's full retirement-age-benefit amount regardless of when the adult took their benefit.
As in the first situation, benefit payments are still subject to the family maximum if there's more than one child. And each child will receive this amount until they graduate from high school or reach age 19, whichever happens first.
A grandparent or adoptive parent receiving benefits must prove they provide at least half of the child’s living expenses for the child to be eligible.
Case in Point: Patrick was age 60 when his son and daughter-in-law had a child. An unfortunate situation arose, and they could no longer care for the child. So, Patrick and his wife, Jill, adopted the baby and again found themselves as parents. Once Patrick reached age 62, he decided to turn on his social security benefits so the child could start receiving children's benefits.
She was about two years old when the monthly benefits/payments started. She'll continue to get benefit payments until she graduates from high school or reaches age 19 (whichever happens first). There aren't restrictions on the use of this money—it can be used for any purpose, such as living expenses or education.
Question: Can One Spouse Receive 50% of their Spouse’s Social Security Benefits?
Answer: Probably the questions posed most often surround spousal benefits. Yes, a spouse may be eligible for up to 50% of their spouse's full retirement age (FRA) benefit amount.
Talking with Families: Pre-Retirees often don't realize that timing can make a significant impact depending on what they're trying to accomplish with their income plan.
As a financial professional, you want to be confident in your conversations regarding the eligibility portion, the "up to" 50% calculations, and explaining FRA.
One missed calculation can make a huge difference to a retirement income plan. A SS Strategist stays up-to-date on all things social securing, allowing you to present the best options to your clients.
There are currently three different ways someone could be eligible for spousal benefits.
1 There's an option for those born before January 2, 1954, but it doesn't apply to many pre-retirees. This "Restricted Application" was available for many Americans until the Bipartisan Budget Act of 2015 put an end date to the program.
A restricted application tells the Social Security office that you're not applying for all your eligible benefits at the same time. This method is used by those who intend to get higher-paying benefits than they'd receive by using other options.
The second option comes into play when both spouses are eligible for social security benefits, and the couple wonders if one person can receive spousal benefits.
Imagine the husband is the higher wage earner of the two, and both have turned on their benefits. Social Security looks at half of the husband's FRA benefit amount and compares it to the wife's FRA benefit amount. If her total FRA amount exceeds his half, she isn't eligible for spousal benefits. She's eligible if her total FRA amount is less than his half.
3 The last option is for spouses not entitled to their own Social Security benefits, making them reliant on their working spouse for benefits. (For example, a spouse that didn't work enough to qualify for benefits, regardless of reason).
It doesn't matter what age the working spouse starts receiving their benefits; the stayat-home spouse is always eligible for up to 50% of the working spouse's FRA benefit amount.
The working spouse must turn on their benefit before the stay-at-home spouse can apply for spousal benefits. Once the working spouse activates their benefit and, assuming they're receiving payments, the stay-at-home spouse can apply for spousal benefits as early as age 62. (An earnings test could wipe out benefits if under FRA when receiving benefits and working at the same time).
If the stay-at-home spouse is under FRA, then the benefit's reduced. If the stay-athome spouse is at or over FRA, they'll receive the full 50% of the working spouse's FRA amount.
When discussing this scenario, be sure to check off these two rules:
Rule one: the husband must turn on his social security benefit, and for most people, the earliest age is 62. This can also be in the form of social security disability benefits.
Rule two: the wife must turn on her benefit; it doesn't matter at what age this happens, but the earliest age is 62.
To determine how much she receives, subtract her full FRA amount from half of his FRA amount—the difference is the spousal benefit that's added to what she's already receiving with her own benefit.
She must take benefits at or after her FRA to receive the full 50%. The benefit amount is reduced if she hasn't reached FRA.
Question: What Does a Widow Face When it Comes to Spousal Benefits?
Answer: A widow’s benefits are probably one of the most important benefits Social Security offers. Financial professionals need to accept that each situation dictates the benefit, meaning this isn't a one size fits all situation.
Talking with Families: Understanding and being able to talk through the widow’s benefit options before a client needs to file is paramount to making sure they receive the maximum benefit.
As a financial professional, sometimes it makes more sense to partner with a strategist than to spend time wading through individual financial situations and Social Security rules to help a widow make the best decision.
It's difficult to lose a spouse, but then a widow faces everything that needs to be done, from the funeral to paying bills to figuring out how much income is now coming in.
A big piece of that income could be Social Security Benefits. When a spouse passes away, there's the potential for the remaining spouse to step up into the deceased spouse's benefit, assuming it's a larger amount. This point in the process is when a financial professional becomes a widow's lifeline.
First, review the eligibility rules that govern widows' benefits.
AGE: Unless the living spouse is currently disabled, the first consideration for eligibility is to be 60 or older. Anyone currently disabled can be as young as 50.
REMARRIAGE: If the widow is under 60 when their spouse passes away and they remarry before turning 60, they aren't eligible for widows' benefits. If they remarry after turning 60, they're qualified to take widow benefits from the deceased spouse's work record.
CHILDREN: If a widow is under 60 when their spouse dies and currently has children under age 16, then they may be eligible for caregiver benefits. This benefit is different than widow's benefits.
What the surviving spouse receives depends on several factors:
How old the deceased was when they died
Did the deceased turn on their benefits before passing away
How old the surviving spouse is when they turn on widow’s benefits
Assumptions to determine eligibility and amount.
1 The deceased passed away before reaching FRA and before turning on their benefits; the widow takes the benefit before hitting FRA. Complicated and requires detailed analysis to determine the eligibility and amount.
2 The deceased passed away at or after reaching FRA but before turning on their benefits; the widow takes the benefit at or after FRA. Quite simply, the widow’s benefit will be what the deceased would have received had they turned on the benefit the day they passed away.
3 The deceased passed away at or after reaching FRA but turned on their benefits; the widow takes the benefit before hitting FRA. Complicated and requires detailed analysis to determine the eligibility and amount.
The benefit amount’s determined based on the widow’s age at the time of filing. If they're at or over FRA, then they'll receive whatever the widow's benefit is. If they’re under FRA when they file, the benefit is reduced based on the widow’s age at the time of filing.
The reduction percentage is determined based on the "Estimated Widow(er) Benefits with Dates of Birth before 1/2/1957" chart.
If the widow was taking their own benefit before filing for widows' benefits, once they switch over to widow's benefits, they can't switch back.
What if the widow hasn’t taken their benefit and they're eligible for widows' benefits? They can apply for one benefit now and switch later to the other if it’s higher. This option is a great strategy to increase one of the benefits to its maximum amount before switching.
Hamilton Morales, NSSA
704.971.7714
hamilton.morales@figmarketing.com
As Senior Vice President and Social Security Specialist, Hamilton is an accomplished speaker with many of our FIG advisors across the country. Hamilton’s been in the financial services industry since November 2001 both as a wholesaler and producer. He currently holds the NSSA (National Social Security Advisor) designation and has been with Financial Independence Group based in Charlotte, NC since February 2005. Hamilton oversees Financial Independence Group’s Social Security Program and manages all aspects of its initiatives. Hamilton’s experience and background include guest speaking on radio shows where he discusses Social Security issues and concerns. He frequently coaches advisors on how they should interact on the topic during program seminars and client appointments. He supports and trains over 1,000 financial advisors nationwide with social security benefits analysis.
Hamilton Morales can help grow your practice around the financial advice clients need most—Social Security. Request him as a key speaker at your next workshop and provide your attendees with expertise and insight on this topic!
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