Many parents of disabled1 children worry about the future, citing their child’s long-term financial security as a top concern. It’s only natural for them to wonder how their child will fare once they’re gone. According to the Bureau of Labor Statistics, just 21.3% of individuals with a disability were employed in 2022—compared to nearly 68% of those without a disability—and even fewer worked full time.2
Benefits like Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) fill at least a portion of the income gap. But there’s one Social Security Administration (SSA) program that is often overlooked: the Childhood Disability Benefit (CDB). This lack of awareness may result in leaving money on the table. Yet triggering the benefit too soon could also prove costly.
Planning for a Disabled Child’s Future
Let’s start by comparing the CDB to SSI and SSDI.
Supplemental Security Income (SSI) is a means-tested benefits program designed to provide for basic needs: namely, food and shelter. It’s often the first benefits program to which a disabled person becomes entitled.3 At a high level, qualifying for the benefit requires that an individual meet the Social Security Administration’s definition of “disabled” and have both fewer than $2,000 of countable assets and limited income.4 In 2023, the maximum federal benefit stood at just $914 per month.5
To collect Social Security Disability Insurance (SSDI), a person must similarly meet the SSA’s definition of disabled. But they must also meet or exceed an income floor based on the person’s age at disability.6 While an important program for some, many disabled individuals won’t qualify for SSDI due to insufficient wages prior to disability. That’s important to keep in mind when planning for a disabled child’s future.
In contrast, the Childhood Disability Benefit allows a disabled adult child to receive disability insurance benefits based on the earnings record of a retired, disabled, or deceased parent.7 While the parent must have received taxable wages or self-employment income, no similar requirement applies to the disabled adult child. Rather, disabled adult children may qualify if:
- their parent is currently collecting a Social Security benefit based on their own work record (or is deceased),
- their disability began prior to age 22 and prevents them from participating in “substantial gainful activity,” and
- they are 18 years or older.8
Importantly, the CDB payment amount equals half of their parent’s full retirement benefit, regardless of whether the parent begins collecting benefits at age 62 or delays claiming until full retirement age. A disabled adult child whose parent qualifies for the maximum possible benefit would receive a whopping $1,904 per month!9 In addition, the adult child may become eligible for Medicare 24 months after Childhood Disability Benefit payments begin.
Should a family planning for a disabled child’s future opt for CDB over SSI? Generally, the decision isn’t one or the other. Disabled persons will likely receive SSI first and then switch to the Childhood Disability Benefit payment once their parent begins collecting their own benefits. When the CDB exceeds SSI, receiving CDB will likely disqualify the disabled person from SSI. Fortunately, disqualification won’t spell disaster for related programs—such as Medicaid—provided the family maintains all other qualifications.
When to Trigger the CDB
Given the financial advantage, should parents activate the adult child’s CDB as early as possible? That would mean claiming Social Security retirement benefits when the parent reaches age 62. But as we demonstrated previously, delaying benefits until full retirement age or even age 70, can provide an important hedge against both inflation and longevity.
For a person born after 1960, collecting benefits at age 62 will provide only 70% of the benefit amount they’d otherwise receive at their full retirement age, 67. And delaying benefits to age 70 could result in a benefit that’s 24% higher than their benefit at age 67. While there is a near-term cost, a claimant who lives past age 82½ will receive greater cumulative benefits by delaying the start of Social Security payments until age 70 versus collecting payments eight years sooner.
So, what’s a family planning for a disabled child’s future to do? Collect retirement benefits early and start receiving the higher Childhood Disability Benefit payments—or delay and lock in a higher retirement benefit for the parent?
A Closer Look
Consider a family where both parents are currently age 62. With similar earnings histories, each parent would receive $28,860 per year if they collected Social Security now. On the other hand, waiting until age 67 or 70 would net them each $40,992 or $50,832, respectively. Their disabled adult child currently receives the maximum federal SSI benefit of $914 per month, or $10,968 annually.
Once one parent files for their own retirement benefit, the adult child can switch over to a CDB payment of $20,496 per year—nearly double their SSI! But to trigger the Childhood Disability Benefit payment today, one parent must file for benefits early, giving up the opportunity to receive a lifelong benefit that’s as much as 87% higher.
The family decides that one parent will delay until age 70, while the other considers collecting early so their child qualifies for the higher CDB payments. Going this route accumulates a higher cumulative family benefit amount sooner (Display). But there’s a trade-off. The longer the parent lives, the less cumulative benefits the family will receive. In fact, if the parent lives to age 82 or 83, the family would have gained at least as much benefit from postponing until age 67 or 70 as they would from triggering the earlier CDB payments. And by age 95, the family will have received an additional 16% in cumulative benefits by delaying.
While the previous case supports a delay, the math isn’t always so straightforward. A range of factors impact the timing of a Social Security claim. And the decision is further complicated when planning for a disabled child’s future. Specifically, families should consider:
- Is the disabled adult child currently receiving SSI? If the disabled person doesn’t qualify for SSI, but will qualify for the CDB benefit, the incremental income becomes more meaningful. The same applies to someone who isn’t receiving the maximum SSI benefit.
- Is the SSI payment issued by a state that provides a supplement? Here, the incremental benefit from a Childhood Disability Benefit payment may be smaller, making a stronger case for delaying so the parent enjoys the higher retirement benefit.
- How does qualifying the disabled adult child for Medicare impact household expenses? If it provides significant cost savings, there could be a greater benefit in triggering the CDB sooner.
- Is someone else drawing off the parent’s earnings record? Keep in mind that the SSA implements a Family Maximum Benefit. While the rules are complex, if another person is drawing (say, a spouse for example), the disabled adult child’s benefit may be reduced. This may diminish the value of switching from SSI to the CDB payment.
- Is one parent older? If the older spouse has a lower primary insurance amount than the younger spouse, the older spouse may claim at age 70, thereby enabling the disabled adult child to begin their CDB payments. They’d do this with an eye toward switching to the CDB payments based on the younger spouse’s record in the future.
There is no singular solution when timing a CDB claim. Variables like longevity, earnings history, SSI qualification, and financial goals all play an important role, to name a few. If you’re planning for a disabled child’s future, your Bernstein Advisor can help you evaluate your unique circumstances.
- Ashley Velategui, CFA
- SVP/National Director, Planning Research—Wealth Strategies Group
1 For this article, the terms “disability,” “disabled,” and “disabled adult child” are assumed to describe an individual who meets the Social Security Administration’s Program Operations Manual Systems (POMS) criteria for benefits. POMS DI 10105.065.
2 USDL-23-0351; https://www.bls.gov/news.release/pdf/disabl.pdf
3 Prior to the age of 18, resources and income of the parent will be “deemed” to belong to the child. As such, while there is no minimum age requirement to begin collecting SSI, most people will not qualify prior to the age of 18. POMS SI 01320 and SI 01330.
4 POMS SI 00501.001.
5 As of 2023; Social Security Administration: https://www.ssa.gov/oact/cola/SSI.html
6 POMS RS 00301.120.
7 For this article, we focus only on qualifying a disabled adult child for CDB payments because their parent is collecting their own Social Security retirement benefits. However, it should be noted that while the maximum benefit is limited to 50% of a living parent’s primary insurance amount, the benefit increases to 75% of the parent’s primary insurance amount if the parent is deceased.
8 POMS RS 00203.080. For 2023, wage earnings are considered “substantial” if the amount averages more than $1,470 per month. POMS DI 10501.015.
9 As of 2023. https://www.ssa.gov/oact/cola/examplemax.html