5 Important Points on How do Child-in-Care Spousal Social Security Benefits Works - Retirement Planning

Social Security is a great safety net for your retirement. Along with your other investments and savings account, Social Security benefits can provide many advantages. As a spouse, it can help you cover day to day costs, add to your financial stability, and be useful in tackling economic emergencies. This money can also be used for the wellbeing of your children. However, as a parent, if you are claiming spousal Social Security child-in-care benefits, the amount and claim process can be a bit different.

If you have a child-in-care, here are 5 important spousal Social Security points you should know of:

Who can claim these benefits?

You can claim Social Security child-in-care under two categories, spousal benefits and survivor benefits. Under spousal benefits, you can start claiming the funds at the age of 62. However, if you are caring for a child, you can also claim the benefits before the age of 62. But you will only get 50% of the benefit that your spouse would receive when they claim Social Security at the full retirement age. If you are claiming the child-in-care benefits as a divorced partner, you need to be at least 62 years old.

Under survivor benefits, spouses can claim benefits at the full retirement age. This means that if you are 60 or older, you can claim 100 percent of your deceased spouse’s Social Security benefits. However, if you are taking care of the deceased person’s child, you can claim these benefits at any age. But your benefits will be capped at 75 percent of the total amount if you are younger than 60.

Another important thing to note here is that the child should be below the age of 16 or suffer from some medical disability to qualify for child-in-care.

What is included under the child-in-care provision?

The United States Social Security Administration or SSA recognises the following two scenarios as child in care:

“Exercising parental control and responsibility for the welfare and care of a child under 16 or a mentally disabled child 16 or older.”
“Performing personal services for a physically disabled child, age 16 or over.”

In addition to this, you will also qualify for spousal child-in-care benefits if you share the custody of the child. However, for this, you need to be living with the child. If the child lives with the other parent for a minimum of a month or more, you may not get child-in-care benefits.

In some cases, if the child is studying in a boarding school or living away from you for various other reasons, the SSA will see which parent is involved in the child’s major life decisions and expenses. You need to be a part of the child’s life with active participation in his or her physical and mental needs.

What happens when your child crosses the age of 16?

If you are below the full retirement age and your child is over 16, you will have to let go of your Social Security benefits. However, if you are 62 or older, you can restart your spousal benefits by filling up the SSA 25 Form. The benefit that you receive on filling the form will be paid after subtracting the funds that you have already received by filing early. If you choose not to fill this form, your benefits will still be paid to you as you reach the full retirement age.

Can you claim child-in-care benefits if you have a job?

There is a fixed limit of income that you can earn each year for it not to interfere with your benefits. For the year 2020, the earning limit is capped at $18,240 per annum. This can increase or decrease based on inflation and deflation. If you earn $18,240 or less, you can claim Social Security as stated above. But if you earn more, SSA will reduce the benefit by $1 for every $2 dollar that you make over the $18,240 limit.

However, in such cases, your spouse can still go ahead and file for their retirement benefits. In simple words, while you cannot claim spousal child-in-care benefits, your spouse can claim Social Security after the full retirement age and use those funds for child-in-care purposes.

Is it advisable to claim child-in-care spousal benefits?

This would depend on your yearly income, spouse’s age, and child’s age, among other factors. If the child is close to the age of 16, you can think about delaying claiming the benefit. You should also avoid using the child-in-care funds if you earn more than the allowed threshold of income, as you will lose out of a substantial amount of money.

If your spouse is over the full retirement age and already claiming Social Security, you can use the money to care for the child. However, in the case of a disabled or special needs child, these benefits can offer added support and stability. It is crucial to analyse all your sources of income and then come to a decision.

To sum it up

Child-in-care spousal Social Security benefits can be very helpful in meeting the education, medical, and other financial demands of a child. They can take some of the burden off your shoulders. But it is important to understand the repercussions of it on your retirement fund too. It helps to consult a Financial Advisor to know if a child-in-care claim can be detrimental to your retirement or not.