How you invest with SSDI benefits will depend on which kind of disability benefits are awarded to you; if an ABLE account exists for instance, then saving funds in it has no limits.
Investment income such as brokerage accounts, rental property rentals and unearned income could impede eligibility for Supplemental Security Income (SSI).
What Are the Asset Limits?
Social Security Administration (SSA) will only consider household income when determining disability eligibility. They define disability as any medical condition that lasts at least 12 months or will lead to death, as this criterion allows individuals with assets accumulated over an extended period to qualify.
When assessing eligibility for Supplemental Security Income (SSI), the Social Security Administration considers all countable resources–things you own that you can convert to cash–to be worth up to $2,000 for individuals or $3,000 for couples. Some things do not count towards this limit, such as homes, properties or lump sums paid into an ABLE account created through State programs (see our SSI Spotlight on ABLE accounts for more details).
The Social Security Administration conducts periodic reviews to make sure you continue meeting technical eligibility for disability benefits you are receiving, known as redeterminations reviews. Typically this occurs every one to six years.
Passive Income Accounts
Passive income accounts offer higher yields than bank and savings accounts, such as CDs, high-yield savings accounts and dividend-paying investments like mutual funds, ETFs or REITs. An experienced disability attorney can advise on which passive income investments best suit your goals and risk tolerance.
Other sources of passive income could include rental property and equipment, court settlements, jury duty pay, tax-exempt trust fund payments and royalties. Such sources should not affect SSDI/SSI eligibility as long as no work is being done on it or maintaining it.
One way of creating passive income is through online products that will continue bringing in income long after their creation and sale, such as creating blogs, writing ebooks or developing courses online. Unfortunately, these methods tend to require more time than traditional work as well as having higher startup costs.
Brokerage Accounts
Brokerage accounts provide you with a way to save and invest money. Opening one may require providing some personal details to a brokerage firm such as your name, address, date of birth and Social Security number (for tax reporting purposes).
While SSDI allows individuals to open brokerage accounts, it is essential that you understand any associated restrictions. For instance, withdrawing money that exceeds SSDI asset limits could result in loss of benefits and may lead to penalties from SSDI.
An ABLE account may be an ideal choice for individuals on SSDI who wish to invest, as these accounts were specifically created for those living with disabilities and their families, allowing them to save and invest without jeopardizing eligibility for public benefits such as SSI or Medicaid. Furthermore, any dividends generated from an ABLE account do not count as earned income.
Savings Accounts
Savings accounts are often used to build emergency funds or achieve short-term savings goals. Social Security Administration does not place limits on savings accounts; however, holding too much income within these accounts could interfere with maintaining disability benefits.
This is especially relevant if the money in your savings account represents income generated through work that the Social Security Administration classifies as substantial gainful activity (SGA). A violation of SGA could result in the cancellation of SSDI or SSI benefits.
But there are several strategies you can use to save while on SSDI without jeopardizing eligibility for these benefits. One such is opening an ABLE account, which is a tax-advantaged savings account designed to help disabled individuals pay for qualifying disability expenses without losing eligibility for means-tested public programs like Social Security Income. You can learn more by visiting the Social Security Administration website; another alternative is setting aside money towards work goals that will eventually lessen the need for disability benefits over time (PASS program).
