Dear Savvy Senior,
I've been told that my children, who are 13 and 16 years old, may be eligible for Social Security when I file for my retirement benefits. What can you tell me about this?
It's true. If you're retired and are still raising young children, there's a little-known Social Security benefit dubbed the "Viagra benefit" that can put some extra money in your family coffers.
Here's how it works. When you file for Social Security retirement benefits, each of your minor children can get money on your work record equaling half of what you would receive at full retirement age, which is currently 66. Even if you were to take a smaller benefit by claiming earlier, your kids will still get half of your full-retirement age amount.
To qualify, your kids--whether they're biological, adopted or step children--must be unmarried and under age 18. Kids that are over 18 but still in high school, can collect too until they graduate or turn 19, whichever comes first. (Other rules apply to kids that are disabled.)
But that's not all.
Because you have one child that's only 13, your wife (if you're married) can collect Social Security benefits on your work record too. And it doesn't matter if she's just 40 years old. The minimum age requirements to collect retirement benefits (62) or survivor benefits (60) do not apply when it comes to collecting benefits as the caregiver of a young child. The spouse's benefit, which is also worth up to half of your benefit, will stop when your child turns 16.
But be aware that there are limits to the amount of money that can be paid to a family. The Social Security "family maximum payment" is determined by a complex formula (see ssa.gov/oact/cola/familymax.html) and can range from 150 to 180 percent of your full retirement benefit amount. If the total exceeds that, each person's benefit, except yours, is cut proportionately until it equals the maximum.
Here's an example of how that's figured. Let's say, for example, that your full retirement age benefit is $2,000. After doing the Social Security math computations that would make your family maximum benefit $3,500.
Subtract your $2,000 benefit from the $3,500 family maximum benefit, which leaves $1,500. That's the monthly amount that can be split between your two children--$750 each. If your wife wants in on it too, the individual checks are smaller, at $500 a piece, but the family amount is the same.
File and Suspend
One other benefit boosting strategy you should know about that's relevant here is "file and suspend." If you're still working and would like to wait, say to age 67 or even 70 to start claiming your own benefits, you can file and suspend starting at full retirement age 66.
This option gives you the ability to start monthly payments for your minor children and wife, but suspend your own benefit so you can collect a larger amount later. Your benefit will increase by 8 percent per year for every year you delay collecting your retirement benefit up until age 70. That means your retirement benefit at age 70 will be 132 percent of what it would have been if he had collected at age 66.
You should also know that minor children can collect Social Security benefits based on the earnings of a parent who is disabled or dead too.
To learn more, see the SSA publication (No. 05-10085) "Benefits For Children" at ssa.gov/pubs/EN-05-10085.pdf.
Send your senior questions to: Savvy Senior, P.O. Box 5443, Norman, OK 73070, or visit SavvySenior.org. Jim Miller is a contributor to the NBC Today show and author of "The Savvy Senior" book.