Ask an advisor: Maximizing social security for my son with autism

Ask an advisor: My son has autism. Would retiring early get him more Social Security?

April 25, 2023 3:43 PM

Social Security provides benefits for disabled children, but the rules are complicated.

Welcome back to "Ask an Advisor," the advice column where real financial professionals answer questions from real people. The topic can be anything in the world of finance, from retirement to taxes to wealth management — or even advice on advising.

Caring for a disabled child is a responsibility that stretches long into the future. In some cases, parents must plan and pay for caregiving to last the rest of the child's life. To accomplish that, many parents are willing to use whatever resources they have — including their retirement savings.

Fortunately, Social Security offers some help. The New Deal-era safety net provides benefits to 7.6 million disabled workers. In addition, the program sometimes offers payments to the disabled adult children of retired workers.

But the rules are complicated: The child must be 18 or older, unmarried, have a qualifying disability that started before they were 22 years old and not earn more than $1,470 per month.

"An adult who has a disability that began before age 22 may be eligible for benefits if their parent is deceased or starts receiving retirement or disability benefits," the Social Security Administration says on its website. "We consider this a 'child's' benefit because it is paid on a parent's Social Security earnings record."

In other words, once the parent starts receiving benefits, the child can too — in some cases. Needless to say, this leaves many parents with a lot of questions: Does their child qualify? How much would they receive? And if the benefits only start once the parent begins collecting Social Security, is it better to retire early?

All these questions are weighing on a father in Queens, New York City, whose adult son has severe autism. Approaching retirement age and facing the complexities of Social Security, he turned to the experts for help. Here's what he wrote:

Retirement

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April 3, 2023 8:43 PM

Dear advisors,

For someone with a disabled adult dependent, is it better to retire earlier or later?

I'm a 59-year-old insurance underwriter in New York City, and I have a 22-year-old son who has severe autism. I've saved up about $1.1 million in my 401(k), but this money is not just for my retirement — it's also for my son's future.

My question is whether to retire at 67 or 70. I'd like to maximize the payments I get from Social Security, which I know will be more generous if I retire later. On the other hand, I've heard that I will get additional Social Security money for my son as soon as I retire, in which case I'd rather start collecting as soon as possible. Is this information accurate? Which way should I go on this? Your help would be greatly appreciated!

Sincerely,

Questioning in Queens

And here's what advisors wrote back:

Talk to a professional

Deborah Purcell, a certified financial planner at

A New Path Financial

in Ann Arbor, Michigan

The answer is (of course), it depends. You are right that your son may receive a Social Security benefit based on your earnings if he qualifies for Disabled Adult Child (DAC) status, and you could calculate the cost-benefit of the timing considering a variety of assumptions, including his need for funds over time and your estimated benefit compared to what he might be entitled to through Supplemental Security Income (SSI) if that is an alternative funding source for him.

Other considerations include what other assets you might have available for him relative to his needs, whether you have a spouse who also will have retirement benefits, and (importantly) what your needs are in retirement. I suggest you reach out to a financial planner who specializes in your situation in New York.

A delicate question

Noah Damsky, a chartered financial analyst and principal at

Marina Wealth Advisors

in Los Angeles

This is heartbreaking, but knowing there are such supportive and loving parents out there is inspiring.

You are correct (let's assume that "retiring" aligns with drawing your SSI benefits), your son will receive Disabled Adult Child benefits when you begin drawing on your benefits. Your child can earn 50% of your Primary Insurance Amount (your benefit at full retirement age, 67) regardless of when you begin taking your benefit. For this reason alone, I can see why you would want to draw your benefit sooner rather than later.

Unfortunately, there are other considerations, such as living expenses and your life expectancy. While taking your benefit soon might be financially meaningful in the short term, it may be detrimental to your long-term financial health. Furthermore, I expect that you are considering how to stretch your finances beyond your life so that you can support your child for many years.

I sympathize with having to make such a challenging, multidimensional decision. Please remember that there are likely no clear-cut right or wrong answers; as long as you make a well-informed decision, you're doing a great job. Discussing the various scenarios with an experienced financial advisor would be beneficial.

Many resources available

Ryan Marshall, a certified financial planner and partner at

ELA Financial Group

in Wyckoff, New Jersey

My son John also has autism and is 15 years old. My advice to this client would be to use some of the resources that are available to him.

For instance, his son may qualify for Social Security Disability, which would be separate from his father's Social Security. However, the 401(k) benefit the son may receive would have a direct effect on his son's disability eligibility.

The father should update his beneficiary immediately. He needs to establish a Special Needs Trust, and that is what should be the beneficiary, not his son. This would help avoid issues with disability. Furthermore, the father should look into NY Able, a savings and investment plan for disabled New Yorkers, and consider setting up an account for his son.

Get the facts first

Tammy Wener, a certified financial planner and co-founder of

RW Financial Planning

in Lincolnshire, Illinois

You should request a copy of his Social Security statement by visiting the Social Security website and creating an account. There you will be able to view your estimated benefit at 67 and 70.

Assuming you are not married and do not have any other minor or adult special needs children, you should expect that your son will receive 50% of your age 67 Social Security benefit, which is referred to as the Primary Insurance Amount (PIA). If you choose to continue to work and start receiving Social Security benefits at age 70, your PIA will likely not increase by much, and therefore will not change (by much) the benefit amount your son will receive during your life or at your death.

Retiring from work and collecting Social Security are not mutually exclusive. Once you reach full retirement age (age 67, based on your age), you can work and earn any amount while retaining all of your Social Security monthly benefits. In this scenario, you would have your work income as well as your Social Security benefits, and your son would separately receive 50% of your Social Security benefit. At your death, your son's benefit would increase to 75% of your monthly amount.

If your primary goal is to maximize the benefits your son will receive over his lifetime, then starting to collect your benefits at age 67 may be the way to go. If your primary goal is to maximize the total benefits your son and you will receive together, and you expect to live a long life, collecting at age 70 may be more beneficial. Also, keep in mind that your son receiving additional income, even Social Security benefits, could potentially impact other income-based benefits he is receiving. Before making any decisions, I recommend that you review all of his benefits.