This is a little unorthodox, but I’m hoping you can help. I have six nieces and nephews from my various brothers and sisters. They range in age from babies to teenagers. When they get older, I want to be able to assist them with therapy sessions — not because I think their parents will mess them up, but because I believe mental health is important to success. I imagine telling them about this fund when they are about 18 or so, so I’d need money I can access in five to 10 years.
The simplest solution would be to set up one or more accounts in your own name that you’ve earmarked for this purpose. You would pay taxes on any interest, dividends and capital gains accrued, but you would maintain control of the money and it wouldn’t affect the children’s ability to get financial aid in college.
Keeping control also gives you the flexibility to use the money for another purpose, in case your young relatives don’t need or want therapy. Mental health challenges — although widespread — aren’t universal. A survey funded by the National Institute of Mental Health found 46% of adults had a psychiatric disorder at some time in the past, and one-quarter had experienced a problem in the previous year. The most common disorders were major depression , alcohol abuse and social anxiety disorder .
The earnings test disappears at full retirement age, which is why it’s usually good to wait until then to apply if you continue to work. Most people benefit from delaying the start of Social Security even longer, but your situation may be one of the exceptions because the child benefit can be a valuable, if temporary, addition to the family finances.
A child can receive up to half the parent’s full retirement benefit, typically until the child turns 18. The parent must apply for his or her own benefit to trigger a child benefit. Also, there’s a limit to how much a family can receive based on one worker’s earnings record. This family maximum varies but can be from 150% to 180% of the parent’s full benefit amount.