Millions of seniors rely on Social Security for income in retirement — but millions of children rely on those critical monthly benefits, too. For parents, Social Security can be especially complicated, but they have to get it right. The choices they make, after all, can have a big impact on their children’s financial security.
Social Security Begins at Birth — or It Should
Applying for a Social Security number for a newborn baby is voluntary — you don’t have to, but you should.
According to the SSA, “Getting your child a Social Security number should be near the top of the list of things you need to do as a new parent or guardian. Your child’s Social Security number is the first step in ensuring valuable protection for any benefits they may be eligible for in the future.”
You’ll need to get your child a Social Security number to:
- Claim the child as a dependent on your taxes
- Open a bank account in the child’s name
- Buy the child savings bonds
- Obtain medical coverage for the child
- Apply for any government services that benefit the child
Applying Is Easy — Unless You Wait
The SSA states that most parents apply for Social Security at the time of birth, right there in the hospital. When you fill out an application for a birth certificate, one of the questions will be whether you want to apply for a Social Security number for your child. The form will ask for the Social Security numbers of both parents, but you can still apply for your newborn’s Social Security card even if you don’t have them.
If you don’t do it at the hospital, you’ll have to apply for a number for your child at a Social Security office at some point in the future. That’s a much longer and more complicated process that requires you to provide further documentation and proof of identity.
Keep Your Card Safe and Secure
No matter how or when you apply, there’s never any cost for a Social Security number or a card. But when you get a card — either for you or your child — treat it like it’s one of the most important pieces of paper you own, because it is. The SSA cautions against carrying it around with you in your wallet. If you lose or damage your card — or that of your child — you can get a replacement, but that’s not a failsafe you want to count on indefinitely.
The SSA will issue no more than three replacement cards in a year and no more than 10 replacements in a lifetime, not counting legal name changes and other exemptions.
What If I Adopt a Child?
In the case of an adoption, the SSA will issue the child a Social Security number and card while the adoption is still being finalized. You may, however, want to wait until the adoption is complete so the SSA can issue a number in the child’s new name with you as a parent.
What If the Worst Happens?
If a parent, guardian or qualifying grandparent of a child dies or becomes disabled, the SSA will pay benefits to the child. In most cases, payments stop when the child turns 18, but payments might continue if the child is disabled or a student.
There are also some special circumstances that parents need to know about.
“If a co-parent passes away, the surviving spouse may be eligible to receive monthly benefits at age 60 or older,” said California-based retirement planning specialist Steve Sexton, CEO of Sexton Advisory Group. “If disabled, it’s age 50 or older. The surviving spouse will receive 71.5% of their deceased spouse’s benefits. Under certain circumstances, benefits can be paid to stepchildren, grandchildren, step-grandchildren or an adopted child.”
The Most Vulnerable Families Are Eligible for Extra Aid
The social safety net offers an extra layer of assistance for families with the greatest need.
“Social Security provides monthly cash payments to help cover the basic needs of children who have a physical or mental disability,” Sexton said. “If you care for a child or teenager with a disability and have limited income, savings and resources, your child might be eligible for Supplemental Security Income (SSI). To be eligible for SSI, the child must have physical or mental conditions that seriously limit their activities and must have lasted or expected to last at least one year or result in death. The child of a deceased parent who is younger than 18 years old can also be eligible for SSI.”
If You’re a Parent, Social Security is a Key Part of Estate Planning
There is a laundry list of variables surrounding Social Security — the age you take it, how much you receive if you’re still earning income, etc. One thing, however, is universal to all parents: The need for planning.
“Regardless of how old you are, if you are married or have children, have a plan in case one or both parents pass away or are disabled,” Sexton said. “Understanding your benefits in these events is critical to providing your family with the financial support they will need.”
Sexton advises his clients who are parents to do the following:
- Formalize a will and trust to indicate who will get what, when and where.
- Create a plan to replace income in the event a parent dies. This can be accomplished easily through life insurance.
- Create a plan for where the money will come from in case one or both parents die.
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