By and large, Social Security is a retirement program, designed to keep senior citizens out of abject poverty as they age. Still, according to the Social Security Administration itself, more than 4.7 million children (people under age 18 or students aged 18 or 19) were receiving benefits as of December 2013.
Of those children, 3.4 million were receiving benefits because they had a parent who was covered by Social Security and passed away, is disabled, or is taking retiree benefits. The other 1.3 million are themselves blind or disabled and are collecting their own disability benefits from SSI.
Who gets what?
As the chart below shows, of the 3.4 million children receiving benefits based on their parents' records, the majority are receiving benefits because of a disabled parent.
Intuitively, it makes sense that fewer children claim benefits based on retired or deceased parents. To qualify for Social Security retirement benefits, Americans need to be at least 62 years old. And in order to have a child under the age of 18 at age 62, one would have to become a parent at age 44 or later. While that's not impossible, it is later than most people have children -- and even in those circumstances, a child wouldn't likely qualify for very long. Further, with the average life expectancy above 78 years, it would be surprising if the majority of children qualified based on deceased parents.
The story looks a little different when you consider the size of those payments. As the chart below shows, while more of the children who receive benefits on their parents' records are doing so because of disabilities, those children's checks are generally the smallest.
This is because children of disabled parents are entitled to receive 50% of their parents' Primary Insurance Amount. That's the same level that children of retired workers can receive. Given that Social Security benefits are based on the recipient's earning history, and a retired worker is likely to have had a longer and fuller career than one disabled early, it makes sense that the children of retired workers generally see higher benefit levels than the children of disabled ones.
Children of deceased parents can get 75% of their parents' Primary Insurance Amount -- a higher level than either of the other groups, which explains why their checks are generally larger.
As of December 2013, 1.3 million children were receiving SSI benefits based on their own disability or blindness. The average monthly check to a child in that program was $631. The charts below show the growth of children's SSI payments over time, both in terms of the number of recipients and in terms of the average size of the payments:
Social Security can help your children -- but it's not enough on its own
Social Security can help your children if you should die prematurely or become disabled yourself, and it does provide some supplemental money for blind or disabled children. Still, the typical checks are measured in the hundreds of dollars per month. That's a decent supplement to help them get by, but it won't even cover what a minimum wage job would.
Like regular Social Security retiree benefits, the benefits offered to children who qualify are designed to help buffer against abject poverty. They're certainly not designed to provide a comfortable lifestyle on their own. If you do have a blind or disabled child, consider setting up a Special Needs Trust for that child to help care for him or her once you are no longer able to.
Additionally, to care for your family in the event of your own untimely death or disability, having life and disability insurance policies of your own will help cover the gaps that Social Security won't. And, of course, saving for your own retirement is crucial not only for your kids' sake, but for your own quality of life in your golden years.
Treat Social Security as a supplement to your other plans for yourself and your family. As a supplement, it serves its role well. If you're expecting more from the program for your children than it's designed to deliver, however, you may not find out just how limited it is until it's too late to do anything about it.