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Part 1, Module 4: Families and Social Security Benefits

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Module 4: Families and Social Security Benefits

InvestmentNews, an online publication and one the country’s leading news sources for financial advisers and investment strategists, has recently seen an uptick in inquiries from readers who ask about whether their grandchildren and other relatives can collect Social Security benefits. Like many other things in Social Security, which consists of over 2,700 rules, the answer is “it depends.”[1] 

The Social Security system is viewed as a dual-purpose system.[2] The main purpose is for retirees themselves to receive benefits. But the other purpose is to protect family members, such as spouses, surviving dependents, and children, who may also qualify for benefits based on a breadwinner’s earnings.[3]

In this module, we will survey the array of benefits available to a breadwinner’s family members and discuss which family members can qualify for Social Security benefits.

Family Maximum for Social Security Benefits 

While a worker and her family can be eligible for Social Security benefits, one cannot simply add up everyone’s potential benefits to calculate the total amount of benefits that a family can collect. The Social Security Administration imposes a limit on benefits that go to a family, called the family maximum, which is based on the worker’s earnings record.[4] 

The family maximum in the case of disability benefits is no more than 150 percent of the disabled worker’s full retirement benefit. For retirement and survivor benefits, the family maximum may be as high as 188 percent of the worker’s full retirement benefit. If the family maximum is exceeded, the benefits earmarked for dependents of the worker (but not those of the worker herself) are reduced proportionately to avoid exceeding the family maximum for the household.

For example, assume a retired breadwinner dies and leaves behind a widow who has reached full retirement age as well as two elderly parents who depended on him for more than half their support. Without the family maximum, the widow qualifies for 100 percent of his full retirement benefits, and each elderly parent qualifies for 75 percent of the full retirement benefit. Adding all that comes to 250 percent of the deceased worker’s full retirement benefit. The family maximum reduces those benefits proportionately, so that the total adds up to no more than 188 percent of the deceased’s full benefit.[5]

Children and Social Security Benefits

Natural and adopted children, as well as stepchildren, can be eligible for Social Security’s old age, survivors and disability insurance benefits.[6] The purpose of providing a child with such benefits is to replace lost financial support due to the parent's disability or death. The SSA will consider a person a child’s “parent” if the person is the mother or father as defined by applicable state law. “Eligible children” includes grandchildren and even step-grandchildren.[7] 

Social Security pays more benefits to children than any other federal government program. In 2017, more than 4 million children qualified for their own Social Security benefits as dependents of breadwinners who have retired, passed away or become disabled. The same year, the Social Security Administration distributed an average of $2.6 billion monthly to these child beneficiaries.[8]

An unmarried child living with a parent who is disabled or retired or with a parent who died after having worked long enough in a job where she paid Social Security taxes can get benefits if:[9]


·         The child is younger than 18 years of age;

·         The child is 18 or 19 years old and a full-time high school student; or

·         The child is 18 or older with a disability that began before he reached age 22.[10]


For example, assume a 62-year-old parent has a 14-year-old child and that the parent’s primary insurance amount would be $2,000 at full retirement age. She could wait the five years to collect $2,000 a month at full retirement age or can immediately receive lower benefits (closer to $1,500 per month), but if she chose the immediate benefits, the child would receive about $1,000 per month until the child reaches the age cutoff of 18 years old. This amounts to a total of $2,500 in monthly benefits for the next four years, though that would then decrease to $1,500 when the child comes of age.

A growing number of American grandparents have grandchildren who live in their households.[11] Grandchildren and even step-grandchildren may be eligible for Social Security benefits. To be eligible as a dependent for Social Security benefits, it’s not enough for the grandchild to live with, and be dependent upon, a grandparent.[12]

To receive these Social Security benefits, all the following must apply:[13]


·         The child’s natural biological parents must be deceased or disabled or the grandparent must legally adopt the child;

·         The child must have begun living with the grandparent before age 18;

·         The child must have received at least one half of his support from the grandparent for the year before the month the grandparent became entitled to retirement or disability insurance benefits or died; and

·         The child’s natural biological parents must not be making regular contributions to the child’s support.


Spouses and Social Security Benefits

            According to a CNBC study, one of the most prevalent myths regarding Social Security is, “My marital status doesn’t affect my decision” of when to take my benefits.[14]

Spousal benefits do not reduce the Social Security benefit that a breadwinner is entitled to and this status can even boost the income of a household if both spouses are alive.

Spousal benefits are designed to provide retirement income to a spouse who either didn't work or earned significantly less than her spouse over her working lifetime and these benefits are available even if one spouse has never worked.[15]

For a spouse to receive a worker’s benefits, the spouse claiming spousal benefits must be age 62 or older and the spouse claiming spousal benefits must file for benefits simultaneously with or after the worker spouse has filed for his or her benefits.[16]

Spousal benefits allow someone with low (or no) social security benefits allowances to instead receive an amount that is equal to 50% of his or her spouse’s primary insurance amount, which is the benefit calculated as of the spouse’s full retirement age. However, under a 2015 law that affects people born in 1954 or later, by applying for spousal benefits, the applicant chooses to forego her own social security benefits. People affected by this law cannot, for example, take spousal benefits until age 70 and then take her own benefits calculated as of her “retirement” at age 70.[17]

Moreover, applying for spousal benefits when younger than full retirement age causes a decrease in benefits that is the same proportionate decrease as suffered by people who choose to receive early retirement benefits. So, for example, if a spouse takes spousal benefits at 62 and the full retirement age is 67, the spousal benefits amount will be reduced by about one-third of what she’d be eligible for at age 67. In effect, instead of being entitled to 50% of her spouse’s benefits (calculated under the assumption that he’d retire at full retirement age), she’d get only 32.5% of her spouse’s benefit amount.[18] If a spouse waits until full retirement age, the amount comes to 50 percent of the breadwinner’s full payment.

Let’s look at an example.

Stephen and Elisa are married. Stephen is 67 years old, and Elisa is 62. Stephen is eligible for a benefit if he retires at full retirement age of $2,400 monthly and Elisa would be eligible for a benefit of $900 when she reaches full retirement age based on her own employment history. So, she should probably choose spousal benefits over her own benefits, as 50% of her spouse’s primary insurance amount is more than her primary insurance amount. However, she can only get a spousal benefit if Stephen also applies rather than, for example, waiting until age 70. Let’s assume Stephen does apply. Elisa can now also apply for spousal benefits. She is entitled to a spousal benefit equal to 32.5% of Stephen’s $2,400 primary insurance amount, or $780. This is, of course, in addition to the full $2,400 that Stephen is entitled to.

            Elisa could instead delay until she reaches full retirement age before filing for spousal benefits, which would then give her a spousal benefit of 50 percent of Stephen’s monthly retirement benefits, or $1,200. This is the same choice as faced by those entitled to retirement benefits under their own work records.

Unlike the basic retirement benefit, which increases up to age 70 if a retiree doesn’t claim it at full retirement age, spousal benefits do not increase after a spouse reaches full retirement age. 50% of the spouse’s primary insurance amount is a hard cap on spousal benefits.

Divorced Spouses and Social Security Benefits

Social security rules allow divorced spouses who are unmarried to claim spousal Social Security benefits if the couple’s marriage lasted at least ten years. An unmarried former spouse can collect up to one-half of the former spouse’s primary insurance amount. 

If a divorced person had more than one marriage that lasted at least ten years, he is entitled to benefits based on one-half of the higher earning ex-spouse’s primary insurance amount.[19] A spousal Social Security benefit to an ex-spouse has no effect on the size of the benefit given to the beneficiary’s current spouse. Also, unlike in the case of current spouse’s, the applying spouse does not have to wait until the ex-spouse applies for social security.[20] 

As in the case of married spouses, to receive half of the former spouse’s primary insurance amount, the applying spouse must be full retirement age. If the spouse applies when younger than full retirement age, the same benefits reduction rules apply. Note that this entitlement ends as soon as the divorced spouse remarries.[21]

Survivor Benefits

Survivor benefits provide long-term support to growing children, surviving spouses, and sometimes even older parents of deceased workers. Surviving spouses generally need to have been married for at least nine months to qualify for survivor benefits.[22] This requirement may be waived, however, if


·         the deceased worker’s death was accidental;

·         the deceased worker’s death occurred in the line of duty while on active duty in one of the uniformed services; or

·         the survivor had previously been divorced from that worker after an earlier marriage lasting for at least nine months.[23]


In the case of a surviving spouse, if the surviving spouse and the deceased spouse at the time of death were both full retirement age, the survivor is entitled to 100% of the deceased spouse’s benefits at the time of death. The survivor can elect to receive survivor’s benefits instead of her benefits, and so should naturally only choose survivor’s benefits if they are greater than the benefits that she would otherwise be entitled to. If the first spouse dies before retirement age, the survivor’s benefits may be slightly different, but are also based on the deceased spouse’s primary insurance amount. 

If the surviving spouse is younger than full retirement age, she can wait until full retirement age to start receiving survivor’s benefits (or to switch from her own benefits to survivor’s benefits), or she can start taking survivor’s benefits as early as age 60. However, if the survivor does apply before reaching full retirement age, her benefits are reduced by an “actuarial reduction” based on a formula that is similar to the consequences of other beneficiaries taking social security before full retirement age.[24]

Note that no matter which spouse dies first, the survivor can choose the higher of the two benefits. Boosting the potential survivor benefit is one reason why Social Security financial experts often recommend delaying claiming benefits until age 70, particularly for the higher-earning spouse. Racking up four years of delayed credits not only boosts that spouse's benefit by 32 percent, it also increases survivor benefits permanently if the first spouse passes away.[25]

Children’s survivor benefits are like those offered to surviving spouses. Children are eligible if they are unmarried and are under 18, students aged 18 or 19, or if they are disabled. Parents of deceased beneficiaries are also eligible for survivor benefits if they were dependent on the deceased.

Children who are entitled to survivor benefits receive 75% of the deceased’s primary insurance amount. A surviving dependent parent is eligible for 82.5% of the deceased’s primary insurance amount, while two surviving dependent parents can each receive 75% of the primary insurance amount. Surviving spouses who are ineligible for spousal survivor benefits due to being too young but who are caring for children under 16 are also entitled to 75% of the deceased’s primary insurance amount.

The total that the beneficiaries can receive is limited to the “maximum family amount” of 150% to 188% that we discussed earlier.[26]

In our final module, we discuss the process of appealing a Social Security Administration decision on benefits and will describe the four levels of appeal available to applicants.

[1] Mary Beth Franklin, Social Security benefits for grandchildren, Investment News, (Apr. 5, 2018), http://www.investmentnews.com/article/20180405/FREE/180409964/social-security-benefits-for-grandchildren.

[3] Understanding the Social Security Family MaximumSocial Security Administration,

https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html (last visited July 2, 2018).

[4] Dan Caplinger, Social Security’s Family Maximum: What You Need to KnowThe Motley Fool, (June 28, 2017).

[5] Jonathan Peterson, Understanding the Family Maximum for Social Security BenefitsAARPhttp://www.dummies.com/personal-finance/retirement-options/understanding-the-family-maximum-for-social-security-benefits/.

[6] Benefits for ChildrenSocial Security Administrationhttps://www.ssa.gov/pubs/EN-05-10085.pdf(last visited July 2, 2018).

[7] Id.; Phillip Moeller, Why Kids Can Be Social Security Game ChangesTime, (July 27, 2015), http://time.com/money/3956341/kids-social-security-benefits/.

[8] Benefits for ChildrenSocial Security Administration, https://www.ssa.gov/pubs/EN-05-10085.pdf (last visited July 2, 2018).

[9] Kids and FamiliesSocial Security Administration,   https://www.ssa.gov/people/kids/ (last visited July 2, 2018).

[10] Benefits for ChildrenSocial Security Administrationhttps://www.ssa.gov/pubs/EN-05-10085.pdf(last visited July 2, 2018).

[12] Naomi Karp, Kinship Care: The Legal Problems of Grandparents and Other Relative Care Givers, 27 Clearinghouse Rev. 585, 585 (1993)

[13] Kids and FamiliesSocial Security Administrationhttps://www.ssa.gov/people/kids/ (last visited July 5, 2018).

[14] Lorie Konish, Believing These Social Security Myths Could Make You Poorer in Retirement, CNBC, (April 24, 2018), https://www.cnbc.com/2018/04/23/believing-these-social-security-myths-could-drain-your-retirement.html.

[15] Maryalene LaPonsie, How To Maximize Social Security with Spousal BenefitsU.S. News, (Mar. 6, 2015), https://money.usnews.com/money/personal-finance/retirement/articles/2015/03/06/how-to-maximize-social-security-with-spousal-benefits

[16] Karin Price Mueller, What Benefits Does Social Security Offer Spouses?NJ.com, (Apr. 19, 2018), http://www.nj.com/business/index.ssf/2018/04/whats_wrong_with_social_security.html.

[17] Dana Anspach, Social Security Now and Later Spousal Benefit StrategyThe Balance, (Apr. 1, 2018), https://www.thebalance.com/social-security-strategy-for-marrieds-age-62-2388923.

[18] Lawrence A. Frolik & Richard L. Kaplan, Elder Law in a Nutshell 271 (2d ed. 1999).

[19] M.L. Reig, The Unspoken Poor: Single Elderly Women Surviving in Rural America, 9 Elder L.J. 257, 261-62 (2001).

[20] See 42 U.S.C. § 402(b)(1)(B), (c)(1)(B); see also Jim Borland, Ex-Spouse Benefits And How They Affect YouSocial Security Matters, (Feb. 15, 2018), https://blog.ssa.gov/ex-spouse-benefits-and-how-they-affect-you/.

[21] Dana Anspach, Social Security Facts About Benefits for an Ex-SpouseThe Balance (Mar. 22, 2018), https://www.thebalance.com/social-security-ex-spouse-2388947.

[22] 1 Social Security Practice Guide § 6.06 (2017).

[23] Id. (internal citations omitted).

[24] Frank Rainaldi & William Rainaldi, Social Security Survivor Benefits SimplifiedWealth Management, (Aug. 26, 2014), http://www.wealthmanagement.com/retirement-planning/social-security-survivor-benefits-simplified.

[25] Rachel L. Sheedy, Maximizing Social Security Survivor BenefitChicago Tribune, (Apr. 13, 2018), http://www.chicagotribune.com/business/success/kiplinger/tca-maximizing-social-security-survivor-benefit-20180413-story.html.

[26] Benefits Planner: Survivors | Planning for Your SurvivorsSocial Security Administration, (July 5, 2018),

https://www.ssa.gov/planners/survivors/onyourown.htmlUnderstanding the Social Security Family MaximumSocial Security Administration,

https://www.ssa.gov/policy/docs/ssb/v75n3/v75n3p1.html(last visited July 2, 2018).