The 50% Social Security bonus most people miss and who is eligible to claim it

Michael Ruger of the Greenbush Financial Group says that he was blown away and “actually didn’t believe it was true,” when he discovered the Social Security Dependent Benefit. A retired police officer called him and explained his situation that he was 62 and had started claiming his Social Security retirement benefit.

But then came the shocking part, he shared that his son was also getting a monthly payment from the Social Security Administration of $1,500. “I thought he misspoke or was incorrect,” the certified financial planner recalls in a video he posted on YouTube.

How to give your Social Security benefit a 50% boost

In order to get the 50% boost to your Social Security benefit, you must first be 62 years old, the earliest that you can start to claim your federal retirement from the SSA. Note that beginning to claim your Social Security benefit at age 62 comes with a penalty of 6% reduction for every year before full retirement age.

Full retirement age is currently 67 for those born in 1960 or later, so claiming at 62 comes with a 30% permanent reduction on what you otherwise would have gotten had you waited until 67 to start claiming. But the math may just work out.

Next, you must also have a minor child, i.e. under 18 years old, who is eligible to claim the Social Security Dependent Benefit. That minor will be entitled to get half of your full retirement age benefit.

Ruger does some simple math, explaining that for example if a person would get $3,000 per month at full retirement age, but claims at 62, they would only get $2,100 a month. However, their dependent child would get $1,500, half of the full retirement age benefit. This adds up to $3,600 per month with the two benefits combined.

The dependent child would essentially get $1,500 every month, without calculating the automatic annual COLA adjustment, until they reach age 18. “So that’s a ton of money we’re talking about,” says Ruger.

Things to keep in mind if you are thinking about claiming the Social Security Dependent Benefit

The first thing the CFP always asks his clients that are thinking about claiming the Social Security Dependent Benefit is: “Are you still working?” If the answer is yes, he then asks: “How much are you making?”

This is because if you are still working and turn on your Social Security, which you must do to claim the Social Security Dependent Benefit, you will be penalized and see your benefit reduced $1 for every $2 you make on any income you earn over $24,480, or $2,040 per month.

If you will reach full retirement age in 2026, the limit on your earnings before penalties will be $65,160. If you earn over this limit after reaching full retirement age, the SSA deducts $1 in benefits for every $3 you earn above the threshold. However, this only counts earnings before the month you reach your full retirement age.

Also, your benefit will be permanently smaller than if you were to wait until full retirement age. For those that wait to claim their retirement benefits after full retirement age can see their monthly benefit get an additional boost of 8% per year. However, once you reach 70 years old, the monthly Social Security payment you will be entitled to stays the same.

Before making these kind of long-term financial decisions, it is advised that you speak to a financial advisor who can work with you to maximize your financial situation in retirement.

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