Social Security Child Benefits One Path to Ease Grandparents' Burden: Study

What You Need to Know

A new research report argues that Social Security child benefits could be a valuable tool to help reduce the monetary strain.
It is estimated that as many as 2 million grandparents are responsible for the basic needs of their grandchildren, with caregiving concentrated in communities of color.
If benefits were extended, the typical eligible household would receive $8,100 in child benefits on top of their current annual benefits of $19,300.

Retired grandparent caregivers are often under great financial pressure, but they are generally ineligible for formal support from federal or state governments because they raise their grandchildren outside of the foster care system and without taking legal custody.

According to a report published by the Center for Retirement Research at Boston College, the burden of caregiving causes significant financial hardship for some retired couples. It is estimated that as many as 2 million grandparents are currently responsible for the basic needs of their grandchildren.

The CRR analysis, penned by researchers Siyan Liu and Laura Quinby, points out that such generation-skipping caregiving is concentrated in historically disadvantaged communities, adding to the economic strain.

Given the scope of the challenge, the CRR researchers ask whether the federal government should intervene — for example, by opening up the ability for some grandparents to apply for Social Security child benefits — and how such an intervention could benefit financially vulnerable older Americans.

The short answer to these questions, as summarized by Liu and Quinby, is that such intervention could be transformational in the lives of some older Americans who find themselves in the position of being primary caregivers for young children.

Burden on Grandparents

As Liu and Quinby write, grandparents often become caregivers to grandchildren after an adult child is no longer available due to death, incarceration or substance abuse. For such families, the demands of raising grandchildren can drain savings, while time-consuming caregiving responsibilities create barriers to working longer and may force grandparents to retire early.

“Unsurprisingly, given these circumstances, grandparent caregivers are particularly vulnerable financially,” the pair warns. “Most grandparent caregivers receive little formal support because they do not legally adopt their grandchildren.”

Without legal custody, grandparents are typically not eligible for state benefits, such as subsidies for foster parents, housing assistance and counseling. Grandparents with low incomes can apply for child-only benefits provided by the Temporary Assistance for Needy Families program, the researchers point out, but doing so requires grandparents to assign to the state their rights to child support payments from non-custodial parents.

Another key source of government support — Social Security child benefits — is available only to legal dependents of Social Security beneficiaries.

“Thus, children can receive benefits as a dependent of a grandparent beneficiary if: 1) they are not already receiving survivor or child benefits through a parent; 2) the grandparent formally adopts them; and 3) the grandparent provides at least half of their support,” the researchers explain. “However, very few grandparent caregiver households claim Social Security child benefits, possibly due to the adoption requirement.”

According to the authors, the only federal support for grandparents who do not adopt their grandchildren comes from personal income tax preferences for dependents. Specifically, the Internal Revenue Service permits grandparents who file taxes to claim their grandchildren as dependents if the children live in the household for at least half the year and the grandparents provide at least half their support.

Which Grandparents are Caregivers?

The researchers go on to show that, consistent with prior literature, grandparents of color (particularly Black grandparents) are more likely to become caregivers. In 2020, for example, about 1% of white households older than 50 reported raising a grandchild, compared to 4% of Black and 2% of Hispanic households.

“Compared to typical grandparents, caregivers are also less likely to have a college degree and more likely to be single women,” the authors note. “Not surprisingly, grandparent caregivers have significantly fewer economic resources prior to retirement compared to non-caregivers.”

Impact of Extending Social Security Child Payments

According to data cited by the researchers, a typical grandparent caregiver raises grandchildren for four years, beginning around age 60.

“Although many of these grandparents are still relatively young, more than 50% receive Social Security benefits while caring for their grandchildren — either because they claim retirement benefits early or are receiving disability benefits,” the authors note.

Since few beneficiary households have grandchildren who are already receiving Social Security benefits through a parent, close to half of grandparent caregiver households would qualify for child benefits if the eligibility criteria were aligned with the IRS rules, the authors say, and the share of eligible households is even higher among Black and Hispanic caregivers.

“The next step is to determine how much grandparent caregivers would get if their household were eligible for child benefits under the more expansive eligibility criteria,” the authors explain. “The amounts turn out to be substantial. The typical eligible household would receive $8,100 in child benefits on top of their current annual benefits of $19,300.”

While Black and Hispanic caregivers would receive lower dollar amounts than white caregivers, both groups would enjoy a higher percentage increase in annual benefits.

“The typical caregiver’s [working income] replacement rate would rise from 47% to 64%,” the authors conclude. “Again, Black and Hispanic households would see greater improvements than white households, as they would experience increases of 18 and 19 percentage points, respectively.”

Bottom Line

As Liu and Quinby conclude, Social Security child benefits could be a valuable tool to help reduce the financial strain of grandparent caregiving. They say the most obvious approach would be to substitute the current IRS requirements for the Social Security Administration’s current requirement of adoption.

Liu and Quinby say an important caveat is that a meaningful share of grandparent caregivers would still not be helped by such a policy change because they have not yet retired and claimed their own Social Security benefits.

“Consequently, Social Security child benefits can best be viewed as a complement to other existing forms of support,” they suggest.