The American social safety net has historically focused on assisting low-income families with children, poor elderly adults, and disabled individuals. A significant yet often overlooked component of this safety net is the Social Security program, which provides support to millions of children through survivor benefits, retiree child benefits, and disability benefits. Despite these provisions, there are substantial gaps in the child safety net, particularly as family needs evolve. This brief focuses on reforming Social Security benefits for children, proposing additional support for low-income grandparent caregivers and students, while offsetting these costs by eliminating child benefits for retirees.
Reforming Social Security Benefits for Children
The current structure of Social Security child benefits also fails to adequately support students pursuing higher education. Originally, Social Security benefits for children of beneficiaries were limited to those under 18. In 1965, the definition of dependent was broadened to include full-time students under 22, but these benefits were eliminated in 1981. Restoring this program would provide essential support to dependents experiencing an unexpected loss of income due to a parent’s retirement, death, or disability.
We propose re-implementing the student benefit with adjustments to include those attending trade school and those no longer living in the home. Students 25 years old or younger would remain eligible for child benefits while enrolled at least half-time in university, community college, or vocational school. This benefit would cover biological children of deceased or disabled workers, adopted children of retirees, or grandchildren of low-income grandparent caregivers. Verification of enrollment would be handled through electronic systems similar to those used for financial aid programs like FAFSA and the Pell Grant. Providing child benefits to all eligible students would cost an estimated $111.4 billion from 2027 to 2035, supporting 492,000 individuals by 2045 with an average annual benefit of $9,092.
Benefit for Low-Income Grandparent Caregivers
An increasing number of children live in multigenerational and skipped-generation households. According to the American Community Survey (ACS) and the Current Population Survey (CPS), there are approximately 4.8 million and 3.7 million multigenerational households, respectively. These households represent about 3.4% of all American households and 12.5% of all households with children. About half of these households rely on grandparents for at least 50% of a dependent’s financial support. Grandparents often step into caregiving roles due to issues such as divorce, substance abuse, incarceration, or mental health problems. This shift towards kin-care settings has proven beneficial for children but often leaves grandparent caregivers financially and emotionally strained.
Grandparent caregivers face significant challenges, including worse health and financial outcomes compared to the general elderly population. They have less wealth, receive less retirement support, and report higher rates of poverty and chronic conditions. Current support for caregiving grandparents is insufficient, with limited assistance available through programs like Temporary Assistance for Needy Families (TANF) and the tax system. The tax code allows grandparents to claim their grandchildren as dependents, but these benefits do not reach non-tax filers and are insufficient for the incremental cost of adding a child to a household.
To address these issues, we propose implementing a new caregiver benefit for low-income grandparent caregivers. This benefit would provide financial support to grandparents who provide at least 50% of a child’s financial support and expect to care for the child for at least three months. Eligible grandparents earning less than 133% of the 3-person household federal poverty line (FPL) would receive an additional $5,500 per grandchild. The benefit would phase out for grandparents earning between 133% and 180% of the FPL, capping at approximately $48,000 in 2025. Households would apply at the Social Security office, and benefits would be recalculated annually based on income changes. This proposal would cost an estimated $64 billion from 2027 to 2035, supporting over 736,000 households in 2027 alone. The benefit would provide an average annual increase of $8,752 per household, with the greatest subsidy going to the first quintile of beneficiaries.
Eliminating Child Benefits for Retirees
Currently, the children of retirees are eligible for 50% of a retiree’s benefits, amounting to significant annual payments. These benefits primarily support higher-income households and may encourage early retirement. In 2024, 323,000 children received Social Security benefits due to their parent’s retirement, with an average monthly payment of $862. The majority of these retirees were men, who are more likely to have children later in life. Eliminating child benefits for the biological children of retirees and any associated spousal benefits would lead to savings of $35.8 billion from 2027 to 2035. This proposal would ensure that Social Security benefits are more equitably distributed to families with greater need.
Conclusion
These reforms aim to realign child benefits with their intended purpose—to support children in families experiencing significant loss of income. By providing additional support to low-income grandparent caregivers and students, while eliminating child and spousal benefits for retirees, these changes would ensure that children facing lost parental income receive adequate financial protection. This realignment would prioritize families with the greatest need, ensuring that the social safety net effectively supports vulnerable populations.
