If you are an older parent, you could be sitting on one of Social Security’s best-kept secrets that could earn your household extra money. This secret is called the Social Security dependent child benefit, and though rarely talked about, it could earn your household thousands of dollars in additional income.
A Hidden Benefit for Older Parents
According to the Social Security Administration (SSA), only about 1% of beneficiaries are children of retired workers receiving an average of $919.20 per month. As the number of older parents rises, more families are quietly and unknowingly becoming eligible for this secret payment.
If you are 62 years old and eligible for Social Security retirement benefits, your unmarried child may also be eligible to receive some benefits based on your work record. The benefit is equivalent to your full retirement age (FRA) amount, even if you claimed before reaching the FRA.
Michael Ruger, a financial adviser and managing partner and chief investment officer at Greenbush Financial Group, said many families are unaware of this rule.
“We get more calls on this than any other topic because it’s not advertised by Social Security, so people just stumble upon it,” Ruger explained. “The dollar amounts can be so large if your kid is young.”
Who Qualifies for the Benefit?
For a parent and the child to qualify for this benefit, they must meet certain criteria:
- The parent must be at least 62 and eligible for Social Security benefits.
- The child must be under 18 and unmarried, or a full-time high school student aged between 18 and 19, or disabled with a disability that began before age 22.
- Once the child is found eligible, they can receive half of the parent’s FRA amount every month until they age out of eligibility.
The Family Maximum Limit
The total amount of benefits a family can receive per month is subject to the family maximum rule. According to the SSA, the limit typically ranges between 150% and 180% of the parent’s FRA amount. If the combined total of the benefits parents and children receive exceeds that threshold, the children’s benefits are reduced proportionately. The parents’ benefit, however, remains unchanged.
Here is an example:
Let’s say a parent’s FRA benefit is $2,500, but because they claimed early, at maybe 62, the benefit was reduced by 30%, to $1,750. The parent has two eligible children aged 8 and 5. Each child is eligible for 50% of the FRA, meaning that each will receive $1,250. Now, in this case, the family’s maximum benefit is 150% of the FRA, which is $3,750. After subtracting the parent’s $2,500 FRA benefits, the children are left to share $1,250, meaning that each will receive $625 per month.
Every month, this family will receive $3,000 ($1,750 for the parent + $1,250 for the two children). Over time, these benefits add up significantly as follows:
- Child 1 (age 8): $625 × 12 months × 10 years = $75,000
- Child 2 (age 5): $625 × 12 months × 13 years = $97,500
- Parent (62–75): $1,750 × 12 months × 13 years = $273,000
By the time the parent reaches 75 the family will have received $445,500 in family Social Security benefits. If the parent lives to 90, the total lifetime payout will grow to around $760,500.
Key Rules to Know
There are some key rules to know before filing early to trigger this benefit. If you continue working while receiving benefits before reaching FRA, you will face the earnings test. For 2025, individuals who do so will have their benefits reduced by $1 for every $2 they earn over $23,400. During the year you reach FRA, that threshold increases to $62,160, while reductions stop the month you attain FRA.
Ruger warned that many people mistakenly think the SSA will only reduce their own benefits if they earn too much, and not that of their child. In reality, both payments are affected since the benefits your child is eligible for are tied to the parent’s work record.
Is It Worth Claiming?
According to experts, whether to claim these benefits or not depends on your personal finances. According to Andrew Wood, a retirement planning adviser with Daniel A. White & Associates, the timing of Social Security benefits relies heavily on an individual’s financial situation. For retirees with limited savings, claiming early might be necessary, even though it could reduce their income later. For those with well-funded savings, claiming before or after FRA may have little impact on their finances.