Updated

Updated · The Motley Fool · Aug 20

Social Security Pays Up to 75% for 3.6 Million Children, Capped by Family Maximums

Updated

Updated · The Motley Fool · Aug 20

Social Security Pays Up to 75% for 3.6 Million Children, Capped by Family Maximums

Q: Why might having a larger family actually shrink the monthly Social Security benefits your children receive?

A larger family can reduce each child’s Social Security check because the program caps how much can be paid on one worker’s record through the “family maximum” rule. Even though an eligible child may qualify for up to 50% of a retired or disabled parent’s primary insurance amount, or up to 75% if the parent has died, those amounts are not guaranteed when several family members qualify at once. Social Security generally limits total family benefits to about 150% to 180% of the worker’s benefit in retirement and survivor cases, and often about 100% to 150% in disabled-worker families. That means the more children or other dependents drawing on the same record, the more likely the family will hit the cap. When that happens, Social Security does not reduce the worker’s own benefit, but it cuts the auxiliary benefits paid to children and other eligible relatives and divides the available amount among them. A simple example shows why family size matters. If a parent’s PIA is $2,000, one child might expect up to $1,000 on a retired or disabled worker’s record. But if several children qualify and the family maximum is, say, $3,200, the total available for dependents may have to be shared, so each child receives less than the full $1,000. In short, more eligible children can mean smaller payments per child because Social Security limits the total payout on a single parent’s earnings record.

3 articles · Updated · The Motley Fool · Aug 20

3.6 million children were receiving Social Security benefits as of July, including 1.98 million tied to deceased workers, 894,000 to disabled workers and 731,000 to retired workers.
Unmarried children generally qualify if they are under 18, are full-time students ages 18 to 19, or have a disability that began before age 22; adopted children, stepchildren and some grandchildren can also qualify.
Benefits can reach 50% of a retired or disabled parent's primary insurance amount and 75% of a deceased parent's amount — equal to $1,000 or $1,500 if the parent's PIA is $2,000.
A family maximum usually limits total payouts on one worker's record to about 150% to 180% of that PIA, so a child may receive less than the headline maximum when spousal or other dependent benefits are also paid.