Social Security with Kids adopted by grandparents

[dandarc]

I'm having a hard time finding the rules around social security benefits when the retirees have adopted minor children. This is fairly immediately impacting my own parents - from what I'm told, the adoption of my niece and nephew will go through once courts are doing more normal business, so this should be imminent-ish. Obviously a long story behind this, but the short version is my parents have been legal guardians and raising the kids for quite a few years, but have only recently decided to formally adopted the kids.

Dad retired and is already collecting social security benefits. Mom is retiring at the end of next month, and is 68 - past normal retirement age, not quite to 70.

So, there's an intersection of the maximum family benefit and the amount each child might be eligible for that I'm struggling. From my reading of the social security handbook, it sounds like each child would be eligible for 50% of the primary insurance amount, but the family limit is 175% (complex formula, but comes out to 1.75% for both of my parent's benefit amounts). Up until they turn 18 or 19 of course (I don't think either of the children would be considered disabled as far as the SSA is concerned).

Seems to me that the best way to do this, assuming both parents are alive, would be for mom to start collecting social security no later than when the adoption goes through and the kids can receive these benefits. Then have the older child collect on my dad's social security account and the younger on my mom's - mom's benefit will be larger, but not so much larger that 75% of just her benefit (family limit) is more than 50% of both of their benefits (individual amount).

So my questions are twofold - is this allowed or is there some rule that both kids have to be on one or the other account? And secondarily, can this assignment of kid to retiree be changed if, for example, one of my parents were to die? I'm having a hard time finding a clear answer.

[mozar]

So, I don't know the answer to this. But it might depend on whether your parents are married, and if your mother intends to collect on her own behalf or get 50% of your dad's. If your mother's benefit is larger why not have both kids file with your mom?

The question of what happens if one of your parent dies I would assume also has to do whether or not your parents are married.
I think your parents are going to have to get on the phone with social security, or make an appointment when it's safe to do so.

I am under the impression that it is rare for retirees to have minor children, in which case I'm not surprised there's not a lot of info on the internet.
My dad who is 63 has a minor child and is working through this himself.

[dandarc]

Yeah, it is a really thin case - lots of rules for this "child benefits for grandparents" too. Legal adoption is required which is hard to do when the parents are still alive and the grandparents are the ones adopting, have to have been dependents for at least a year before grandparents draw social security, kids really are dependent, and on and on. Happens to be that for our family, all of the boxes appear to be checked once the adoption is finalized, which it likely already would have been if not for the pandemic closing courts in my parent's state for non-essential business. Of course we'd all rather this social security thing wasn't happening for the kids - that likely means a much happier situation for everyone overall.

Anyway - on the numbers, Dad's benefit is 75.6% of mom's benefit (a little less if she waits a couple of years but still >> 50%), so it makes the most sense for them to each collect their own benefits. Parents are married.

What I'm getting at is 0.5 + 0.5 * 0.756 = 0.878. If you put both kids on mom's record, which if you have to pick just one or the other obviously makes the most sense, you run into that family limit so the incremental benefit from kids is just 0.75. Assuming that is allowed, and I think that it is but was hoping someone here might know a lot more than me, that's $400 / month or so better than both kids on mom's record. $1K / month better than both kids on Dad's record.

This is a largely academic exercise - my mom is also getting a fairly generous pension, I added it all up under various scenarios yesterday and they'll certainly be fine regardless of the choices made - the "worst case" as far as the total income is concerned - they choose the 50% survivor benefit on the pension, mom dies first, the kids are old enough there is no social security for them (actually this part of it is a very good thing - means mom lived for another 13 years or longer from today), mom takes social security immediately and so gets the lowest benefit there - all of that happens and my dad would still have over $6K / month between the pension and social security in that scenario. Both the pension and social security are inflation adjusted. In the short term, the monthly total is into 5 figures regardless of what they choose once mom starts drawing the pension and social security. And they're both working still - mom doesn't retire until end of August and I think plans to work some part time, and Dad is working part time as well. They are set. They don't feel that way, but if they can't make this work financially it isn't because there isn't enough money coming in.

[Cassie]

I really feel sorry for your parents that they won’t be enjoying retirement. They sound like wonderful people for taking this on.