Planning for your Social Security benefits can be complicated. It’s always a good idea to have a financial advisor review your Social Security earnings history and retirement estimates to help you get the most out of your own personal benefits. When you have an adult child with a disability, this is especially important, as decisions around Social Security will have an added layer of complexity.
If your qualifying child is eligible for Social Security benefits themselves, either through Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI), your retirement benefits can include an additional benefit for them, called the Disabled Adult Child (DAC) benefit. A qualifying child is:
- An adult at the time of application, having reached their 18th birthday.
- Determined by the Social Security Administration to have a childhood disability. The age of the medical determination of disability needs to be prior to their 22nd birthday.
- A person who has not earned Substantial Gainful Activity (SGA) for longer than six months. SGA is a qualification of Social Security benefits for a disabled person and is determined to be earned income below a threshold of a predetermined monthly amount. For 2024, that number is $1,550/month.
- An unmarried individual or a person who is married to an individual who is also receiving Social Security benefits themselves, including the DAC, SSDI or SSI retirement benefits (as of a new law that went into effect in January 2024).
If your adult child meets these criteria, you can apply for the Disabled Adult Benefit for them. They are eligible to receive one-half of your full retirement-age benefit during your lifetime, regardless of when you file for Social Security. After your life, they will receive a bump up to 75% of your full retirement-age benefit. This benefit does not change what you are owed by Social Security.
As you navigate Social Security options, and particularly the Disabled Adult Child benefit, there are two main questions to discuss with your CFP® professional:
- What is the best financial benefit to your family over the expected lifetime of Social Security benefits?
- What are your family’s medical needs?
Reviewing the financial benefit to the family
Social Security is a main component in any retirement plan. A family’s financial benefit typically remains highest when the highest earner waits the longest they can to file for their own retirement benefit. The lower earner has a few more options, including the following:
- File early to start your Social Security benefit and child’s benefit sooner.
- File at full retirement age. This approach does not increase the benefits of your adult disabled child but would increase your benefit.
- File at age 70. If you worked as much as the highest earner and your benefit will not increase with a spousal benefit, this approach may benefit you.
Your CFP® professional can help you decide which option makes the most sense for your family.
Determining the medical needs of the family
When discussing Social Security and support for your disabled adult child, you should be talking with your advisor about your expected lifestyle, as well as your expected lifespan. If you have personal medical needs that you anticipate will impact your lifespan, discuss filing earlier for both the comfort of having cash flow available and for maximizing your lifetime Social Security benefits.
Look into when your disabled adult child will be able to use Medicare benefits. They should be able to use Medicare after being eligible to receive SSDI for 24 months. Medicare is the federally run health insurance program that can add to your child’s health access. As a disabled individual on SSI, your adult child would have already been eligible to enroll in Medicaid, the insurance and disability support program jointly financed by state and federal governments.
In my time working with families with disabled adult children, I have seen many people who believe they must figure these questions out on their own. Others have expected them to have the answers to what is best for their child financially. I have heard multiple people joke about the Ph.D.s they would have in social services, education, health management, crisis management and law, just for parenting their child with disabilities.
If you’re one of these parents, working with a CFP® professional who specializes in disability finance can relieve the pressure and free up your time, so you can be more present in your life. Find your CFP® professional today.
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