Can You Have a Savings Account on Disability?

Individuals receiving disability benefits often wonder about the implications of having a savings account. Understanding how personal savings interact with disability benefits is important for managing financial stability. The rules for holding savings vary significantly depending on the specific type of disability program an individual receives. This distinction is paramount for individuals seeking to save funds while maintaining their benefit eligibility.

Understanding Different Types of Disability Benefits

The United States offers two primary federal disability benefit programs, each with distinct eligibility criteria and financial considerations. Social Security Disability Insurance (SSDI) provides benefits to individuals who have worked and paid Social Security taxes for a sufficient period. This program is not needs-based, meaning that personal assets, including savings, do not affect eligibility or benefit amounts. Individuals receiving SSDI can accumulate any amount of savings without concern for their benefits being reduced or terminated.

Conversely, Supplemental Security Income (SSI) is a needs-based program funded by general tax revenues, designed for individuals with limited income and resources, regardless of work history. Eligibility for SSI is subject to strict financial limits, which directly consider an individual’s assets. Having countable resources above a certain threshold can lead to a reduction or cessation of benefits. State or local disability programs may also exist, but their specific rules for income and assets can vary widely.

How Savings Affect Supplemental Security Income

For individuals receiving Supplemental Security Income (SSI), savings directly impact benefit eligibility. The Social Security Administration (SSA) enforces strict resource limits for SSI recipients. For an individual, the countable resource limit is $2,000, while for a couple, it is $3,000. Funds held in checking accounts, savings accounts, certificates of deposit, or similar financial instruments are generally considered countable resources.

Certain assets are excluded from these resource calculations:
The primary residence an individual lives in and the land it is on do not count towards the limit.
One vehicle, regardless of its value, is also excluded if it is used for transportation by the individual or a household member.
Household goods and personal effects, such as furniture or jewelry, are not counted.
Burial spaces and up to $1,500 in burial funds for the individual and their spouse are excluded.

It is important for SSI recipients to regularly monitor their account balances to ensure they remain below the established resource limits. If an individual’s countable resources exceed the limit at any point during a month, their SSI benefits for that month could be affected. Promptly reporting any changes in assets to the Social Security Administration is necessary to avoid overpayments or benefit suspensions.

ABLE Accounts as a Savings Solution

For individuals with disabilities who wish to save money without jeopardizing their eligibility for means-tested benefits like SSI, ABLE (Achieving a Better Life Experience) accounts offer a specific solution. These tax-advantaged savings accounts were established to allow eligible individuals to save for qualified disability expenses. To be eligible for an ABLE account, the individual must have had the onset of their disability before the age of 26. This age requirement is set to expand to before age 46 on January 1, 2026.

Contributions to an ABLE account can come from various sources, including the account owner, family, and friends. The annual contribution limit for an ABLE account is tied to the federal gift tax exclusion, which is $19,000 for 2025. An employed ABLE account owner who does not participate in an employer-sponsored retirement plan may be able to contribute an additional amount, up to the lesser of their annual compensation or the federal poverty level for a one-person household.

A significant benefit of ABLE accounts is that up to $100,000 held within the account is disregarded as a resource for SSI purposes. Funds in an ABLE account can be used for a broad range of qualified disability expenses, including:
Education
Housing
Transportation
Employment training and support
Assistive technology
Health, prevention and wellness
Financial management
Burial expenses

General Considerations for Managing Savings

Regardless of the type of disability benefit received, transparently reporting any changes in financial circumstances to the Social Security Administration is important. For SSI recipients, changes in income or assets must be reported promptly, typically by the tenth day of the month after the change occurs. Failing to report changes can lead to benefit overpayments, which the individual may be required to repay, or even suspension of benefits.

Maintaining accurate records of all financial transactions, including deposits, withdrawals, and account balances, is important. This documentation helps verify financial information if questions arise from the Social Security Administration. For those receiving SSI, tracking how funds are spent, especially from ABLE accounts, is important to ensure compliance with qualified expense guidelines.

Individuals receiving disability benefits can benefit from budgeting and setting financial goals, similar to anyone else managing their finances. Understanding the specific rules that apply to their benefits allows for informed decisions about saving and spending. When complex financial situations arise, seeking advice from a financial professional specializing in disability benefits can provide tailored guidance for effective money management.