Whether there are savings limits on the amount of money you can have in a savings account and remain eligible for benefits through Social Security depends on which kinds of benefits you receive.
The Truth About Savings Accounts and SSDI
Individuals in the Social Security Disability Insurance (SSDI) program receive long-term income because they are unable to work; the program does not place any limits on savings account amounts or other financial assets generally. It does, however, limit the amount of income you can receive from work or from passive sources like investments, which can include amounts in savings and/or checking accounts each month. If the funds in these accounts represent newer income, receiving that income could mean violating SSDI requirements. This income limit can change from year to year.
The common misconception that there is an SSDI bank account limit is due to confusion over two distinct government programs with different rules:
Social Security Disability Insurance (SSDI): A public assistance program providing people with long-term physical or mental disabilities with income while they are unable to work. There are no savings account restrictions for SSDI recipients.
Supplemental Security Income (SSI): A public assistance program providing additional income for disabled, blind, and senior Americans with little to no resources or income. Among “countable resources,” which includes money in a savings account, an individual can have no more than $2,000. Couples can have no more than $3,000. If your savings account holds less than these limits but surpasses these limits when combined with other countable resources, you may be ineligible for SSI.
Countable Resources for SSI
SSI considers the following to be resources:
- Cash
- Bank accounts
- Stocks
- Bonds
- Mutual funds
- Land
- Life insurance
- Personal property
- Vehicles
However, not all of these are deemed to be “countable resources.” Resources that are not factored into monetary limitations include:
- Your home and the land it sits on
- Property used for trade or business
- One vehicle used for transportation
- Household goods and personal effects
- Life insurance policies totaling less than $1,500
- Money and property set aside under Plan to Achieve Self-Support (PASS)
- Up to $100,000 of funds saved in an Achieving a Better Life Experience (ABLE) account
How to Think About Savings When Receiving SSDI
A savings account is a deposit account that generally earns a higher interest rate than an interest-bearing checking account. Legally, savings accounts are sometimes treated differently because they are traditionally used to accrue emergency funds and other savings, in contrast with checking accounts used for outside deposits and debits. There are no specific limits to the amount of funds that can be held in savings accounts under SSDI.
However, remember that what a benefit recipient has in savings can include monies considered income by the SSA, such as cash-based payments transferred to savings accounts when working a job.
In this context, it is probably more useful to think about savings in terms of the income an SSDI recipient earns within a given month that counts as a substantial gainful activity (SGA) under the SSA’s rules. A given amount in savings accounts, like other income accounts, could be used to calculate total monthly income—which could impact your ability to receive continued monthly SSDI payments. Those who receive too much monthly income may no longer be eligible for SSDI benefits.
What Does the SSA Mean By Gainful Work Activity?
SGA is a term the SSA uses to describe engaging in employment or self-employment for payment or profit. The most common type of SGA is regular full-time or part-time employment. The SSA makes an annual substantial gainful activity determination that dictates the total amount of income one can receive monthly while working while remaining eligible for SSDI.
This determination depends on the national average wage index, which is used to identify a reasonable income based on general living standards, inflation, and cost-of-living changes.
It is important to note the SGA standard is not only applied to current applicants of the SSDI program but also to those who receive ongoing benefits. SSDI is more about an inability to work than meeting the specific criteria for an accepted disability. It is among an SSDI lawyer’s responsibilities to help you verify your disability with the SSA whether you have been working or not, so don’t allow your previous work history to affect your choice to apply for SSDI.
While receiving SSDI, the SSA requires benefits recipients to monitor their monthly income and report overages while engaging in SGA. However, the SSA is known to closely monitor disabled persons’ incomes.
Trial Work Periods and Income Limits
Those interested in SSDI savings limits may want to be aware of SSA programs that permit disabled individuals to work while disabled without losing benefits. This trial work period allows for nine months of concurrent benefits and income above the established SGA limits. Make sure you understand and follow the rules regarding this program before choosing to earn excessive income.
Can a Person on SSDI Hold Long-Term Investments?
Yes. It’s always good to talk to an accounting, tax, or investment professional regarding your financial investments and how they can affect your current and future SSDI payments. However, financial investments are a valid strategy to grow your personal savings while on SSDI because there are no restrictions on assets that don’t yield income. If someone with SSDI benefits holds one of the accounts or assets listed before receiving benefits, that money does not violate SSDI rules.
What Types of Investments Can Someone Have While on Disability?
If you receive SSDI payments and wish to accrue personal savings or a financial safety net, there are options available outside of a savings account that don’t qualify as income. Under the current tax code drawing on, or accepting money from, each of these asset classes counts as passive income, which doesn’t count towards earned income. Individuals receiving SSDI can have various types of investment and savings accounts that create passive income.
Individual Retirement Account (IRA): This includes Traditional and Roth IRAs. These accounts offer tax advantages for retirement savings and are, therefore, attractive to many investors. Contributions to a Traditional IRA may be tax-deductible, while Roth IRA contributions are made with after-tax dollars, allowing tax-free withdrawals in retirement. You can have access to and use IRA accounts as long as you have earned income aside from your SSDI payments, which don’t count as earned income.
Employer-Sponsored Retirement Plans: These include 401(k) or 403(b) plans offered by employers. Individuals contribute a portion of their income, often with employer matching, for retirement savings. Retirement savings programs are often available in full and part-time jobs. As of 2024, full-time work is likely to put benefits recipients over income limits. Therefore, retirement plans usually come from part-time work or a previous job. Drawing from 401(k) or 403(b) plans won’t affect your SSDI payments unless your yearly income including withdrawals from these plans surpasses SSDI thresholds.
Brokerage Accounts: These are general investment accounts through brokerage firms where individuals can buy and sell stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other securities. SSDI recipients are not limited in any way in terms of wealth and asset accrual while receiving payments, as long as they aren’t receiving any sort of payout for these assets.
Savings Accounts: While not strictly investment accounts, savings accounts are common for emergency funds and short-term savings goals. Savings accounts are permitted for SSDI recipients but the amount held within these accounts can sometimes reflect too much income to maintain benefits. If funds in savings accounts were earned before the period you are claiming SSDI benefits, they will not affect eligibility.
Health Savings Account (HSA): If someone is enrolled in a high-deductible health plan, they might have an HSA. This account offers tax advantages for medical expenses. These are usually associated with full-time employment. At the current monthly income threshold established by the SSA, many full-time jobs provide too much income to receive SSDI. However, some individuals with disabilities can access ABLE accounts (outlined in more detail below) that can help pay for medical expenses with disability.
529 College Savings Plan: For those with children planning for education expenses, a 529 plan allows tax-advantaged savings for educational purposes. These and similar savings plans can be grown or maintained while on disability.
Real Estate Investments: Some individuals might invest in real estate, either directly by purchasing property or indirectly through Real Estate Investment Trusts (REITs). Real estate investments can encompass several income-generating and non-income-generating properties that may or may not affect your overall eligibility for SSDI. In many cases, benefits recipients have inherited a property after a death in their family, provided by a will or trust. Real estate investments are typically considered passive income under SSDI. However, there are some exceptions where it is counted as earned income. These kinds of investments will almost always make you ineligible for SSI, since these assets are countable resources.
Certificate of Deposit (CD): These are long-term deposits with fixed interest rates and future maturity dates, often considered low-risk investments. These are in some ways similar to savings accounts and are permitted by the SSA for SSDI recipients.
Trusts: Trusts are legal arrangements where assets are held as managed financial resources for the benefit of another. If you hold a trust and plan on receiving SSDI benefits, you may want to speak to a professional to determine whether you can pause or adjust income distributions while receiving federal disability benefits.
ABLE: Achieving a Better Life Experience (ABLE) accounts are designed to help disabled individuals pay for disability-related expenses with tax-free savings accounts. Learn more about the details of ABLE accounts on the SSA website.
PASS: PASS, or the Plan to Achieve Self-Support program, is an SSA initiative meant to help disabled individuals find employment that lessens the need for SSDI benefits. Learn about the details of PASS directly on the SSA website.