Dear Rusty: I will be 62 in 2024 and am considering starting Social Security benefits at that time. I will have two children under the age of 18. One of them will be 10 and the other 15. Will they be able to draw benefits in addition to my benefits?
Signed: Father of Two
Dear Father of Two: Yes, if you claim your Social Security (SS) retirement benefits at 62, your minor children will be able to get benefits from you until they are 18 years old (or up to 19 if still in high school). You will likely be designated as representative payee for those benefits and will be obligated to use them only for your children’s behalf (which could include simply saving the money for their future). But there’s more to consider.
Normally, a minor child is eligible for 50 percent of the parent’s full retirement age (FRA) entitlement (even if you claim at 62), but Social Security’s family maximum will likely restrict each child’s benefit to make it less than 50 percent. Then, once the 15-year-old ages out of eligibility at 18 (or 19), the younger child’s benefit will increase to the full 50 percent of your FRA amount. That is unless you are married and your wife will also be collecting a spousal benefit on your record. In that case, the family maximum will limit payments for all of the dependents receiving payments based on your SS record (both your children and your wife). Generally, the family maximum is between 150 percent and 188 percent of your FRA entitlement, from which your own FRA entitlement is subtracted, leaving 50 percent to 88 percent of the family maximum for your dependents.
It’s important to remember that by claiming your own SS retirement benefit at age 62 your monthly payment will be cut by 30 percent (you’ll get 70 percent of your FRA entitlement), and that is a permanent reduction. So, you may wish to evaluate whether the money your children will get until they are 18 will offset the lifetime reduction to your own benefit payment. Your life expectancy is important when making that decision, and if you wish to estimate your potential longevity, I suggest using this tool: https://socialsecurityreport.org/tools/life-expectancy-calculator/.
It’s also important to remember that claiming benefits before your FRA will mean that, if you work, you’ll be subject to Social Security’s “earnings test,” which limits how much you can earn before some of your benefits are taken away. The earnings limit changes annually (it’s $21,240 for 2023) and, if the limit is exceeded, the Social Security Administration (SSA) will withhold $1 in benefits for every $2 you are over the limit. The SSA will withhold future benefits to recover anything you owe for exceeding the earnings limit and, if your benefits are withheld for this reason, your dependents’ benefits will also be withheld for those same months. So, your plans for working should be weighed carefully in deciding whether to claim your Social Security benefits early.
To summarize: If you won’t work full time after age 62 and you’re comfortable with 70 percent of your FRA benefit entitlement for the rest of your life, then claiming at 62 will also entitle your children (and possibly your wife) to dependent benefits (restricted by the family maximum). But, if you continue to work full time, Social Security’s earnings test will likely mean neither you nor your dependents can receive full Social Security benefits at this time. And for clarity, the earnings limit no longer applies after you reach your full retirement age.
Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: email@example.com.
Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.