For most Americans, becoming a grandparent means carving out spare time to spend with their grandchildren and then leaving at their leisure. But for about 2 million grandparents in the United States, it’s a full-time job that requires raising and caring for their grandkids every day of the week. Most of these grandparents have limited financial resources but get little support from the government and Social Security.
That could be fixed with a simple change in rules, according to a new study from the Center for Retirement Research (CRR) at Boston College. The study found that while grandparents raising grandchildren are often under financial stress, they get very little support without legal custody under rules adopted by the Social Security Administration (SSA).
Social Security Policy Changes Addressing the Financial Strain on Grandparents Raising Grandchildren
These grandparents have taken on full-time parental roles because their grandkids’ legal parents are either deceased, incarcerated or unable to care for children because of substance abuse or other problems. As study authors Siyan Liu and Laura Quinby pointed out, Social Security child benefits are only available to those who are legal dependents of Social Security beneficiaries — and many grandparents raising their grandchildren full-time don’t qualify.
But the IRS doesn’t require legal custody to claim a child as a dependent for tax purposes. Changing the Social Security rules so they are in line with IRS rules could give these grandparents a huge financial lift, according to the CRR.
“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 wrote.
What would the financial impact be if grandparents were eligible for child benefits under the more expansive IRS eligibility criteria? As the CRR noted, the amount would be substantial.
“The typical eligible household would receive $8,100 in child benefits on top of their current annual benefits of $19,300,” the authors wrote.
That extra $8,100 could make a big difference for many grandparents. For one thing, caring for grandkids can drain savings that would otherwise go toward paying bills and funding retirement. For another, “time-consuming caregiving responsibilities create barriers to working longer” and might even force grandparents to retire early, before they have a big enough nest egg.
So what’s the solution?
According to the CRR, Social Security child benefits could be a “valuable tool” — if they were made available to more grandparents.
“The most obvious approach would be to substitute the current IRS requirements for the SSA current requirement of adoption,” Liu and Quinby wrote. “Around half of caregiver households would benefit from expanded access to these benefits.”