Maximizing Your Income: The Power of Having a Savings Account on Social Security Disability
If an individual is seeking disability benefits, they may be relieved to know that having a savings account won't disqualify them from receiving Social Security disability benefits. While there are specific financial circumstances that can affect Social Security eligibility, possessing a savings account isn't one of them.
However, it's important to be aware of the nuances of any benefits-related matters. Therefore, let's explore this issue in greater depth. In this article, we'll provide:
- • A comprehensive understanding of how Social Security operates
- • The distinction between Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI)
- • Who is qualified for Social Security disability benefits
- • Guidelines for holding a savings account while receiving benefits
- • Circumstances that can result in disqualification from benefits.
- Let's delve into this significant subject.
What is Social Security?
To begin, let's examine how Social Security works. The Social Security program has been providing Americans with financial support for many decades, which is why it is so well-known. Social Security benefits are designed to help Americans preserve their fundamental well-being and protection. These benefits date back to the 1930s in response to the economic catastrophe caused by the Great Depression. At present, one out of five Americans receives some form of Social Security benefits, with one-third of these recipients being disabled, dependents, or survivors of deceased workers. Over ten million Americans are either disabled workers or their dependents.
Can I Qualify for Social Security Disability Insurance or Supplemental Security Income with a Savings Account?
Many individuals believe that having any assets, including a savings account, can sabotage their qualification for Social Security disability. The good news is that this belief is false. Anyone can receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) regardless of whether they have a savings account or checking account. The amount of money in the bank account is not important; other program requirements must be satisfied to be eligible for SSDI.
To be eligible for SSDI benefits, an individual must have worked in a job or jobs covered by Social Security and have a current medical condition that meets Social Security's definition of disability. Typically, this program can assist those who are unable to work for a year or more due to a disability. It provides monthly payments until the individual can work again on a regular basis. If one becomes eligible for full retirement benefits when receiving SSDI benefits, the benefits will convert to retirement benefits that provide the same level of financial support.
The Supplemental Security Income (SSI) program is a federal assistance program funded by general tax revenue, not Social Security taxes. This program provides financial support to aid recipients in meeting fundamental necessities such as clothing, shelter, and food. The program assists those who are aged (65 or older), blind, or disabled and have little or no income (or limited resources). To be eligible, participants must be a U.S. citizen or national or qualify as one of various categories of noncitizens.
What to Report to Social Security About Your Assets for Benefits
Are you eligible for SSI or SSDI with a savings account? In order to qualify for benefits through the SSI program, certain resources (known as assets in this instance) must be disclosed. There are no such limitations in place for the SSDI program. Knowing the value of a recipient's resources (i.e., financial assets) is essential in determining whether they are eligible for Social Security benefits. If a recipient's resources exceed the threshold value at the beginning of the month (when resources are counted), they will not receive benefits for that month. They can be eligible again the following month if they use or sell enough resources to fall below the limit.
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- An array of resources can be considered eligible for Social Security benefits, including:
- • Cash
- • Bank accounts (such as a regular savings account or a growth savings account, among others)
• Stocks, mutual funds, and U.S. savings bonds
• Life insurance
• Personal property
• Anything that can be converted into cash and used for essential goods, such as food and shelter
• Deemed resources
The term “deemed resources” denotes the resources owned by certain individuals related to the Social Security benefits applicant, namely a spouse, a parent, a parent’s spouse, a sponsor of a noncitizen, or a sponsor’s spouse. A portion of these deemed resources can be excluded from the overall limit. For example, if a child under 18 lives with only one parent, up to $2,000 worth of deemed resources won’t be counted towards the limit. If they live with two parents, that exclusion amount rises to $3,000.
You may also be interested in: What Are Some Different Types of Savings Accounts?
How Much Money Can You Have in Your Savings Account and Still Qualify for SSI or SSDI?
For the Supplemental Security Income (SSI) program, the total resource limit, which includes what’s in a checking account, must not exceed $2,000 for an individual or $3,000 for a couple. However, there are no asset limits when it comes to the Social Security Disability Insurance (SSDI) program. If someone is applying for the SSDI program, they can own more than $3,000 in assets, and it won’t affect their eligibility.
SSA Exceptions and Programs
Not all assets owned by an SSI applicant will be counted towards the resource limit (remember, there is no such limit for the SSDI program). For SSI, several exceptions apply to what counts as resources. The following assets are disregarded:
- • The primary residence and the land it stands on
- • One vehicle, regardless of its value, if the applicant or a household member uses it for transportation
- • Household goods and personal belongings
- • Life insurance policies with a total face value of $1,500 or less
- • Burial spaces for the applicant or their immediate family
- • Burial funds for the applicant and their spouse, up to $1,500 each
- • Property used by the applicant or their spouse for business or work purposes
- • If the applicant is blind or disabled, any money set aside under a Plan to Achieve Self-Support
- • Up to $100,000 of funds in an Achieving a Better Life Experience account established through a State ABLE program
The Bottom Line
The impact of having a savings account on eligibility for Social Security benefits varies depending on the program. While it is possible to have a savings account while receiving SSDI, there are limits to the value of the applicant’s assets, including those in their savings accounts, for SSI qualification. If you are interested in opening a savings account, check out SoFi for our online banking services. With direct deposit, you can earn a highly competitive annual percentage yield, and you won’t be charged any standard bank fees.
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Answers to Frequently Asked Questions:
Will Social Security investigate my bank account?
This depends on whether you are applying for Supplemental Social Security Income (SSI) benefits. In this case, your personal assets are factored into your eligibility. However, if you are applying for Social Security Disability Insurance (SSDI), your assets will not be taken into consideration.
Does money in the bank affect my Social Security disability benefits?
No, having money in the bank will not affect your SSDI benefits. However, there is a limit of $2,000 to $3,000 (varies by household) for the SSI program.
Can I have a savings account if I am on Social Security disability?
Absolutely! You can have a savings account regardless of your disability status, and savings will not be taken into consideration when applying for SSDI.
SoFi Bank offers a Debit Mastercard® for account holders, which can be used anywhere that Mastercard is accepted. However, financial tips and strategies provided on this website are of a general nature and may not be suitable for everyone. Please evaluate your own circumstances before making any financial decisions. SOBK0222016.
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