Social Security was created to help American families weather the loss of income when a breadwinner retires, becomes disabled or dies. Although Social Security is well known as an essential source of retirement security for older Americans, there is less awareness of the critical income protection it has provided for survivors, the disabled and children. Social Security is a safety net for millions of working parents who may have no other resources to fall back on when tragedy strikes and they are no longer able to earn an income to support their family. From clothing and feeding their children to buying needed supplies, paying health care costs and saving for college, parents and grandparents understand that Social Security benefits are a stabilizing source of income for their children from their birth to age eighteen.
Social Security is among the nation’s largest programs serving children. Every month, about 4.4 million American children receive $2.8 billion in Social Security benefits because at least one of their parents is disabled, retired or deceased. As a result, Social Security lifts more than one million children out of poverty each year. About 1.2 million children of deceased workers receive survivor benefits, about 343,125 children of retired workers receive benefits as do 1.3 million children of disabled workers.
How Social Security Keeps its Promise to All Generations
Retirement Benefits
In addition to providing income security to retirees, retirement benefits provide monthly support to dependent children of retired parents and grandparents. The child benefits, in addition to their own retirement benefits, help retired workers care for their dependent children when they retire by partially supplanting lost wages. Unmarried children younger than age 18 (or up to 19 if they are attending elementary or secondary schools full time) are eligible to receive up to one-half of their caregivers’ Social Security full retirement benefits. These benefits allow aging caregivers to retire from the workforce with the needed income to continue to provide for their dependent children. These benefits are especially important to ‘grandfamilies’ or families in which grandparents are primarily responsible for caring for children who live with them.
Children may also benefit from the support of their grandparents’ own Social Security retirement benefits, even if the grandparents are not primarily responsible for the wellbeing of their children. Decades of stagnating wages and increased costs have left many families unable to make ends meet without financial contributions from grandparents from their own Social Security benefits.
Survivors Benefits
The prospect of any child losing a parent is frightening and heartbreaking. Without Social Security’s survivors benefits, however, the possibility could also mean financial impoverishment for a child. Survivor benefits provide monthly income support to unmarried children who are younger than 18 (or up to age 19 if they are full-time students) in the event they lose a parent or caregiver. Social Security is the only significant source of life insurance protection for the vast majority of the nation’s children, providing coverage worth over $725,000 to workers, paid for as part of their payroll contributions. This coverage would be unaffordable for many families if they had attempted to purchase comparable policies in the private market, and in many cases coverage would not be available at any price as a result of preexisting health conditions or hazards associated with the workplace. This is especially true in communities of color. For example, African American parents are more likely than others to become disabled or die before retirement. Because of this, the percentage of African American children who receive Social Security survivor benefits is higher than their percentage representation in the population of all children.
The nation’s devastating COVID-19 pandemic clearly showed the importance of Social Security’s survivors benefit for American families. According to the Centers for Disease Control (CDC) from April 1, 2020 through June 30, 2021, COVID-19 left more than 140,000 children under age 18 in the United States without a parent, custodial grandparent, or grandparent caregiver who provided the child’s home and basic needs. Overall, approximately 1 out of 500 children in the United States has experienced COVID-19-associated orphanhood or death of a grandparent caregiver. There were racial, ethnic, and geographic disparities in COVID-19-associated death of caregivers: children of racial and ethnic minorities accounted for 65 percent of those who lost a primary caregiver due to the pandemic. These children are eligible for children’s benefits. These benefits do not replace the support and love of the lost parents, but they will help keep these children out of poverty.
Disability benefits
Social Security’s Disability Insurance program (SSDI) pays benefits to millions of disabled workers and their dependent family members, providing a crucial source of financial security for people who are severely limited in their ability to work because of a disabling illness or injury. The SSDI program is financed through worker payroll taxes, and for most workers is the only disability insurance program available to them. A young person starting a career today has a 1 in 3 chance of dying or qualifying for Social Security Disability Insurance (SSDI) before reaching age 67. For most beneficiaries, SSDI is their primary source of income. Almost one-half of disabled workers rely on Social Security for the majority of their family income. Without SSDI nearly half of disability beneficiaries would be living in poverty. For the average wage earner with a family, SSDI benefits are equivalent to a $680,000 disability insurance policy. For low-wage earners, SSDI replaces approximately 61 percent of past earnings. For medium-wage earners, the replacement rate is approximately 42 percent.
Communities of color have higher rates of disability than other workers, and consequently are more likely to receive benefits from the SSDI program. African Americans, for example, make up approximately 12 percent of the American population; however, they represent 20 percent of SSDI beneficiaries. Latino children are also disproportionately represented among those receiving disability benefits because their parents are more likely than the population at large to receive disability benefits.
Supplemental Security Income (SSI)
The Supplemental Security Income program (SSI) is not financed through payroll taxes but through general tax revenues. However, it is administered by the Social Security Administration. The SSI program provides payments to blind or disabled children who live in households with low income and limited resources. Children who have significant disabilities and who come from low-income families are among the most vulnerable groups with compelling needs for income assistance. Their disabilities pose additional costs to their already limited family resources. Additionally, if these children do not receive treatment when they are young, they are likely to end up relying on public assistance then they become adults. SSI is indispensable to these families’ economic security. Over 5.4 million Americans under age 65 received SSI benefits through March 2022.
Conclusion
While Social Security plays a critical role in the economic security of retired workers, it also provides near universal support for children – covering 98 percent of all children in the event of the death, disability or retirement of a caregiver. Social Security is not a transfer of resources from the young to the old like budget cutters would like to claim. It is an intergenerational compact that provides income security to all ages, helping give families some measure of protection from the “hazards and vicissitudes” of life.
Government Relations and Policy
January 2023
Source: Generations United, “The Benefits of Social Security for Children.”