Social Security benefits for grandchildren

In some cases, dependent children are eligible for Social Security based on their retired, disabled or deceased grandparent's benefits.
APR 05, 2018

Perhaps it is a sign of the times, but I have noticed an uptick in questions from InvestmentNews readers about the possibility of grandchildren being able to collect Social Security benefits on their grandparent's earnings record. In some cases, they can, but the rules are very specific. "I was with a client today and he and his wife have full custody of their grandson," one financial adviser from White Plains, N.Y., wrote to me in an email recently. "If he started taking Social Security, would his grandson be entitled to Social Security benefits? Or would they need to fully adopt him in order for the grandson to receive this benefit?" As with many of Social Security's confusing array of more than 2,700 rules, the answer is "it depends." "If a child is not receiving benefits from a parent when the grandparent retires, becomes disabled or dies, the grandchild may be able to qualify for benefits if certain conditions are met," the Social Security Administration states on its website. "Generally, the biological parents of the child must be deceased or disabled or the grandchild must be legally adopted by the grandparent." [More: How children can reap the benefits of Social Security] To qualify for dependent benefits, the grandchild must have begun living with the grandparent before age 18 and received at least one-half of his or her support from the grandparent for the year before the grandparent became entitled to retirement or disability benefits or died, the agency explained. However, if the grandparents are already receiving benefits when they become responsible for the grandchild, they would need to adopt the child before he or she could qualify for Social Security benefits. Last year, the Social Security Administration distributed an average of $2.6 billion in benefits each month to about 4.2 million children of parents or grandparents who are disabled, retired or deceased. To qualify for benefits, a child must be unmarried and under age 18 (or 19 if still in high school), or age 18 or older with a disability that began before age 22. Under certain circumstances, Social Security also can pay benefits to a stepchild, step-grandchild or adopted child. Nationwide, about 2.5 million grandparents report they share a household with their grandchildren and are responsible for their needs, according to Census Bureau data. The numbers of grandparent-led households have increased in recent years, partly due to the national opioid crisis that has robbed children of their homes and parents, leaving their grandparents to pick up the pieces. "Too often, moms and dads are falling victims to the epidemic and grandparents are stepping in to care for the children," Sen. Bob Casey, D-Penn., said during a February hearing by the Senate Health, Education, Labor and Pensions Committee on the impact of the national opioid crisis on children and families. "For grandparents, it can dramatically alter their life plans," Mr. Casey said. "They postpone their retirement and keep working longer to be able to afford school clothes, child care and food, and some deplete their nest eggs and retirement savings to finance these new costs." "Grandparents stepping up to take on the role of primary caretaker of their grandchildren deserve our support," he said. In March, the Senate passed the Supporting Grandparents Raising Grandchildren Act co-sponsored by Sens. Casey and Susan Collins, R-Maine. Both of their states have been hard hit by the opioid crisis. The bill would create a federal task force to coordinate and disseminate information about critical resources on legal custody, social services, mental health counseling and other vital programs to assist grandparents raising their grandchildren. The bill must still pass the House before it can become law. A child can receive up to half a parent's or grandparent's full Social Security retirement or disability benefit. If the child receives survivor benefits, they can get up to 75% of a deceased parent's (or grandparent's) basic Social Security benefit. But there is a limit to the amount of money a family can receive based on a worker's earnings record. The family maximum benefit limit ranges from 150% or 180% of a parent's or grandparent's full benefit amount. If the total amount payable to all family members exceeds this limit, each dependent's benefit is proportionately reduced until the total equals the maximum allowable amount. The worker's benefit is never reduced.

Latest News

IRS floats eligible investment rules for Trump Accounts
IRS floats eligible investment rules for Trump Accounts

New Treasury guidance sets fee caps, defines index-tracking rules, and bars ESG-linked funds from the tax-deferred accounts for minors

Carson Group adds $405M Northwestern Mutual team in Atlanta
Carson Group adds $405M Northwestern Mutual team in Atlanta

Yari Capital's move to Carson continues a run of additions for the $62 billion firm, days after it hired a veteran recruiter from Osaic.

Wealth Enhancement inks 'coming home' deal with Oklahoma RIA
Wealth Enhancement inks 'coming home' deal with Oklahoma RIA

Servo Wealth Management's $210 million book brings the Minneapolis consolidator's total client assets further past $160 billion.

Omaha-based RIA Stevens Capital Partners nears $1B, buys Dallas CPA firm
Omaha-based RIA Stevens Capital Partners nears $1B, buys Dallas CPA firm

The deal to acquire a 300-client tax firm sets up much-needed succession for its 80-year-old founder, while joining a widening trend of tax service integration among RIAs.

Most Americans oblivious to Social Security’s projected demise
Most Americans oblivious to Social Security’s projected demise

New Nationwide Retirement Institute survey reveals eight in ten Americans agree Social Security needs fixing and how.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income