Author Topic: Social Security Benefits for Older Parents?  (Read 1550 times)

ospreyjp

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Social Security Benefits for Older Parents?
« on: November 18, 2019, 01:53:03 PM »
Has anyone retired with children at 62 and utilized the benefits payable to your children?  If so, did this impact your ability to retire early?  We are looking at retiring a few years before 62 with the plan to bridge the gap between retirement and 62 with withdrawals from our investments.  Once I reach 62, the family would receive payments of up to 150% of my fill retirement payout.  In our case, with initially 3 children under 19 and in school (required for eligibility), this makes the difference between retiring early or not.

https://www.ssa.gov/planners/retire/applying7.html

Anyone currently using these benefits?

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« Last Edit: November 18, 2019, 01:56:39 PM by ospreyjp »

hdatontodo

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Re: Social Security Benefits for Older Parents?
« Reply #1 on: November 18, 2019, 02:21:50 PM »
I plan to do this in 3 years. I read earlier that the money belongs to the child.

What is this Reporting Requirement section   saying about spending not saving the money or having to send it back at age 18 for reissue to the now-adult?
 https://socialsecurityintelligence.com/social-security-benefits-for-children/

https://secure.ssa.gov/poms.nsf/lnx/0200603055

I had my son when 47, and so did my Dad. However, he kept my $800/mo in 1976.

Here is a link about being in HS past 18.
https://www.ssa.gov/forms/ssa-1372.pdf
« Last Edit: November 18, 2019, 02:39:37 PM by hdatontodo »

ospreyjp

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Re: Social Security Benefits for Older Parents?
« Reply #2 on: November 18, 2019, 02:29:45 PM »
I believe there is a requirement to fill out a worksheet each year that lists where the money was spent.  The details can be fairly broad though (i.e. clothing $xx etc). 



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robartsd

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Re: Social Security Benefits for Older Parents?
« Reply #3 on: November 18, 2019, 03:41:46 PM »
Most people here target retirement before any child who would qualify for this benefit would be born, I doubt you'll get a response from someone with experience in this particular area. Also note that the benefit belongs to the child, not the parent. Of course the parent may spend the benefit for the needs of the child. If any of the benefit is saved, it is transferred to the child when the child reaches age 18.

Personal benefit at age 70 is about 77% higher than personal benefit at age 62. I've seen the numbers run for someone looking to maximize their sustainable spending rate as always being better off delaying SS until age 70. Does the extra benefit received for the children change this? I suppose that would depend on the ages of the children involved.

Suppose the primary insurance amount (PIA) is $1000 and maximum family benefit is $1500. You decided to take a reduced benefit of $700 to retire at 62. The child's benefit is up to 50% of PIA, so $500 in this example. The maximum family benefit would apply while at least two children qualify. I'll assume you collect $1500 for 4 years, $1200 ($700 for yourself and $500 for one qualifying child) for 2 years, and $700 for 2 years between age 62 and age 70. Assuming real, after tax investment returns of 5% at the your 70th birthday then net value of the benefits the family had received to date would be about $150,000. Using the 4% rule, this doesn't quite replace the benefit reduction taken to retire at age 62.

I doubt that there are many families that can actually retire earlier using this a strategy.

ospreyjp

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Re: Social Security Benefits for Older Parents?
« Reply #4 on: November 18, 2019, 07:21:18 PM »
Most people here target retirement before any child who would qualify for this benefit would be born, I doubt you'll get a response from someone with experience in this particular area. Also note that the benefit belongs to the child, not the parent. Of course the parent may spend the benefit for the needs of the child. If any of the benefit is saved, it is transferred to the child when the child reaches age 18.

Personal benefit at age 70 is about 77% higher than personal benefit at age 62. I've seen the numbers run for someone looking to maximize their sustainable spending rate as always being better off delaying SS until age 70. Does the extra benefit received for the children change this? I suppose that would depend on the ages of the children involved.

Suppose the primary insurance amount (PIA) is $1000 and maximum family benefit is $1500. You decided to take a reduced benefit of $700 to retire at 62. The child's benefit is up to 50% of PIA, so $500 in this example. The maximum family benefit would apply while at least two children qualify. I'll assume you collect $1500 for 4 years, $1200 ($700 for yourself and $500 for one qualifying child) for 2 years, and $700 for 2 years between age 62 and age 70. Assuming real, after tax investment returns of 5% at the your 70th birthday then net value of the benefits the family had received to date would be about $150,000. Using the 4% rule, this doesn't quite replace the benefit reduction taken to retire at age 62.

I doubt that there are many families that can actually retire earlier using this a strategy.
Thanks for your reply and for running a good hypothetical scenario.  Yes, it would not make sense for many, especially those who are planning to retire much earlier.  However, in my case I will have three children all eligible for a number of years (dropping off sequentially until I am over 70).  My numbers would make this a definite win long term over waiting until I am 70 to begin SS payments. 

My primary dilemma at this point is whether to wait until 62 to retire from the Feds or go with an earlier MRA+10 retirement as early as 56.  Waiting till 62 would get me to my pension and solo/dependent SS.  Retiring earlier would mean drawing down investments  and waiting for a few years to get SS and pension. 

Anyway, you are probably right that not many are in this situation on this forum...

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hdatontodo

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Re: Social Security Benefits for Older Parents?
« Reply #5 on: November 18, 2019, 07:23:46 PM »
This link

https://finance.zacks.com/childrens-social-security-benefits-accounted-annually-9664.html

says

"The SSA sends out the accounting report for certain representative payees approximately every 12 months..."

"Although certain groups are no longer required to fill out the annual Representative Payee Report, all representative payees must keep accurate records on how the benefits were spent. The Social Security Administration has a right to request these records at any time..."

"There are four groups of representative payees that are no longer required to complete the annual report. They include any biological or adoptive parents of a minor child that live in the same house as the child..."

Also, here are SS links - https://www.ssa.gov/pubs/EN-05-10085.pdf and https://www.ssa.gov/forms/ssa-4.html

Yet another link: https://www.brightscope.com/financial-planning/advice/article/31261/How-Does-A-Minor-Get-Social-Security/

From SS:

https://www.ssa.gov/payee/

Due to a recent change in the law, we no longer require the following payees to complete an annual Representative Payee Report:
   Natural or adoptive parents of a minor child beneficiary who primarily reside in the same household as the child;
   ...
   ...
Although these groups of payees no longer have to complete the annual Representative Payee Report, all payees are responsible for keeping records of how the payments are spent or saved, and making all records available for review if requested by SSA.
« Last Edit: November 19, 2019, 09:15:07 AM by hdatontodo »

ospreyjp

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Re: Social Security Benefits for Older Parents?
« Reply #6 on: November 18, 2019, 07:26:43 PM »
This link

https://finance.zacks.com/childrens-social-security-benefits-accounted-annually-9664.html

says

"The SSA sends out the accounting report for certain representative payees approximately every 12 months..."

"Although certain groups are no longer required to fill out the annual Representative Payee Report, all representative payees must keep accurate records on how the benefits were spent. The Social Security Administration has a right to request these records at any time..."

"There are four groups of representative payees that are no longer required to complete the annual report. They include any biological or adoptive parents of a minor child that live in the same house as the child..."
Excellent! I was not aware of the change.  This makes the process much easier...

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robartsd

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Re: Social Security Benefits for Older Parents?
« Reply #7 on: November 19, 2019, 11:28:12 AM »
My primary dilemma at this point is whether to wait until 62 to retire from the Feds or go with an earlier MRA+10 retirement as early as 56.  Waiting till 62 would get me to my pension and solo/dependent SS.  Retiring earlier would mean drawing down investments  and waiting for a few years to get SS and pension. 
Of course you can choose the Fed retirement any time from 56 to 62. Personally, I'd probably wait to retire until I thought I had enough without the child benefit.

 

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