Giving a Financial Lift to Grandparents Caring for a Child – Center for Retirement Research

For myriad reasons, the 2 million older Americans who are raising their grandchildren get very little help in the form of government assistance.

They tend to be from disadvantaged Black and Hispanic communities and are often taking care of the children because the parents are in jail, abusing drugs, or deceased. But the grandparents usually can’t get foster care, housing or other state assistance or Social Security’s dependent child benefit if they don’t adopt the child and become the legal guardian.

A new study finds that easing up on the eligibility restrictions for Social Security’s dependent child benefit that is linked to the grandparent’s retirement or disability benefits would greatly improve their financial security.

The typical Black grandparent household would benefit the most. The researchers Siyan Liu and Laura Quinby estimated that their income from Social Security would rise from $16,400 to $24,500 when the child benefit is added to the money they’re already receiving from Social Security. Hispanics’ benefits would increase from $18,700 to $27,000, and Whites from $25,900 to $36,000.

And these grandparents could really use the help because they are in much worse shape financially than retirees who do not care for a child. Grandparent caregivers, at around age 60, typically have only $10,000 in household savings. The time-consuming job of caring for a young child only worsens the financial strain if it has forced them to retire early or made it impossible to find a part-time job to cover the extra expenses.

Extending the Social Security child benefit to these grandparents would require loosening eligibility. The researchers’ modeled their proposed change on eligibility for the IRS tax credits for parents claiming their children as dependents.

The IRS – in contrast to Social Security – does not require grandparents to have legal custody of the child. They can claim a dependent on their taxes if they provide at least half of the money needed to support a child who is living with them at least six months a year.

Among grandparent caregivers who meet this standard, nearly half are Social Security beneficiaries and would qualify for the thousands of dollars a year in financial support.

Expanding eligibility for Social Security’s child benefit could be an important tool to reduce the financial strain on grandparent caregivers, the researchers concluded.

To read this brief by Siyan Liu and Laura Quinby, see “Could Social Security Child Benefits Help Grandparent Caregivers?”

The research reported herein was derived in whole or in part from research activities performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium.  The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA, any agency of the federal government, or Boston College.  Neither the United States Government nor any agency thereof, nor any of their employees, make any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report.  Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

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