Have you ever bought a lottery ticket and then forgotten to check if you’ve won?
Believe it or not, about $2 billion in lottery prizes go unclaimed every year. Many of those winning tickets are worth a meager $1 to $5, but some people have a life-changing prize in their possession and they’re completely unaware.1
Similarly, many people with certain circumstances leave Social Security benefits unclaimed because they’re simply unaware of their options. These benefits may not change anyone’s life to the degree that winning the Powerball® would, but they could help your clients nonetheless.
First, Many Americans Don’t Have a Basic Understanding of How Social Security Works
Social Security can seem pretty straightforward: You reach at least age 62 and start collecting income from the government, based on what you’ve contributed. In reality, it’s much more complicated. Studies show that most Americans know very little about how Social Security benefits really work. In a recent online survey, nearly half of adults (47%) ages 50 and older couldn’t pass a simple true-false Social Security quiz.2 This can lead to an underutilization of Social Security benefits that would be especially helpful in scenarios that allow for it, such as when your clients are raising children later in life. In that instance, when your client files for Social Security, their family may be eligible for additional benefits based on the filer’s earnings history.
Second, It’s Not Just Retirees Who Can Get Social Security
Your client’s child(ren) may get benefits based on their parent’s earnings history when the client starts taking their Social Security retirement benefits.3 A child may get up to half of their parent’s full benefit.
To get benefits, the child must be unmarried and be:4
- Younger than age 18; or
- 18-19 years old and a full-time student (no higher than grade 12); or
- 18 or older and disabled before age 22
- Under certain circumstances, benefits can also be paid to a stepchild, adopted child or a dependent grandchild or step-grandchild.5
You might be thinking, “Wait a second, what sixty-something has kids who are 18 or younger?” Well, actor Richard Gere just fathered a child at 69 years old—but his child likely won’t be concerned about collecting his father’s Social Security benefits. Today, family structures vary more than ever. And sometimes, the “restructuring” of families can make children eligible for benefits based on their parent’s earnings history, even when the parent is still living.