How to Budget Effectively on SSI Benefits

Supplemental Security Income (SSI) is a federal program administered by the Social Security Administration (SSA) that provides financial assistance for those over 65, blind, or disabled with limited income and resources. Although SSI benefits were intended to help a person manage his essential expenses, managing money on a fixed income poses a challenge.

In this article, you will understand the budgeting tips and techniques for those living on SSI. With such techniques, the benefit of SSI will be greater control over the money, thereby maximizing their benefits and eventually improving their standard of living.

However, making effective financial plans begins with understanding the nuances of SSI benefits, such as who is eligible and how payments are calculated. We will break down these areas first and then continue with practical budgeting strategies.

Understanding SSI Benefits and Eligibility Rules

The SSI amount is based on the Federal Benefit Rate (FBR), which the Federal government sets annually. Typically, both the FBR and SSI payments increase each year to adjust for the cost of living.

For 2024, the maximum federal SSI payment for an individual is $943 per month. Couples may receive up to $1,415. Some states offer additional State Supplemental Payments, which can increase the total benefit amount.

Age-related Eligibility Criteria

SSI has specific eligibility criteria based on age groups.

If the recipient is under 18:

• The disability condition must meet the “child” disability rules.
• Social Security will verify the income and resources of both parents to check their financial eligibility.

If the recipient is between ages 18 and 65:

• The disability condition must meet the “adult” disability rules.
• Social Security will verify the income and resources of the recipient to check the financial eligibility.
• Social Security will verify the recipient's living situation to determine the SSI cash benefit amount, but this will not affect eligibility.

If the recipient is 65 or older:

• There is no disability condition applied.
• Social Security will verify the income and resources of the recipient to check the financial eligibility.
• Social Security will verify the recipient's living situation and determine the SSI cash benefit amount. But this will not affect eligibility.

Disability Qualification Guidelines

• SSI is available to people of all ages, including children and those over 65.
• The recipient should be experiencing a physical or mental disability for a continuous 12 months or longer.
• The disability must be severe and affect workability (Substantial Gainful Activity, or SGA).
• If the recipient is under the age of 18, Social Security will ignore the recipient’s workability due to the disability.

Income Limits and Calculations

SSI recipients must pass a means test to qualify for the program. The Social Security Administration (SSA) applies strict income-based eligibility rules, which also determine the size of the SSI cash benefit.

The SSA categorizes income into two types:

• Earned income: Money people get from working a job.
• Unearned income: Money from other sources, such as cash gifts or other benefit checks.

The SSA treats earned and unearned income differently when calculating SSI benefits. Generally, less of your earned income counts against your SSI benefit than unearned income.

For 2024, the Federal Benefit Rate (FBR), which serves as both the maximum federal SSI payment and the income limit, is:

• $943 per month for individuals
• $1,415 per month for couples

Learn more: Understanding SSI Benefits.

How it is calculated:

Budgeting Tips for Living on SSI

Living on SSI can be challenging for many people due to its limited income stream. However, as an SSI-eligible person, if you plan your budget carefully, you can manage your finances more effectively and potentially save money.

Here are some tips to create a realistic budget while living on SSI benefits:

Calculate your income

• You should know how much your countable income is every month. Your income will affect the SSI benefit amount you'll receive.
• Be aware of income exclusions. For example, the SSA doesn't count the first $20 of most income received in a month when calculating your SSI benefit.
• Check for any deductions, such as Medicare premiums or state taxes. Make sure you deduct all the costs while calculating your monthly income.
• Remember to report any changes in your income or living situation to the Social Security Administration, as these can affect your SSI benefits.

Organize Your Important Documents

You must prepare a list and keep records of all the necessary documents. This includes:

• Social Security records.
• Bank statements.
• Current wage stubs.
• Notes on employment duration with dates.
• 401k information.
• ABLE account withdrawal details.
• Rental agreement.
• Loan documents.
• Records about your disability.
• Documentation of guardianship.
• Letters from Social Security on SSL benefits.
• Communication details with Social Security.
• Application copies sent to Social Security.

Track Your Spending

One of the initial tricks for a budget is tracking your money toward every payment you make. For that you may use a budget app or spreadsheet to note your every expense. This can help you compare your monthly income with overall expenses and calculate the surplus or deficit.

It will be helpful to understand your cost patterns if you categorize your spending. This will also help you identify areas where you can cut back or put some more cash.

Prioritize Your Expenses

Categorizing your expenses itself won’t give you the space for savings. For that, you also need to prioritize each and every cost based on its importance. You may create three main segments:

• Essential needs - These include only the most important expenses such as housing, food, utilities, and transportation.
• Healthcare costs - You can’t avoid this segment. You must have adequate health insurance coverage, so you need to pay a premium for that. Also, you need funds to pay for medicines.
• Personal savings - You may save a decent chunk of your income in emergency funds.

Reduce Costs

No matter how much money you get, if you do not reduce your costs, you can’t save a single dollar. How to do that? Here’s how:

• Consider cutting back non-essential expenses such as movie shows, dining out, and unnecessary shopping.
• If you have to buy groceries, do it smartly. Look for offers with your credit card, special day sales, discounts on bulk buying, and generic brands with low prices.
• When you choose any paid subscriptions, make sure to negotiate charges. The services may include utilities, cable, gym membership, and internet.
• If you have your own car, keep it parked away for a while. Use public transportation during weekdays. If you really want to use your car, use it on weekends only.

Build a Support Network

• You can’t live alone and face any problem all by yourself. Reach out to local support groups or online communities where folks living on SSI gather and discuss their problems. You never know; someone from there can solve your problems, and you may solve someone else’s, too.
• Don't hesitate to reach out to social service agencies or community organizations for help.

Additional Resources and Support Programs

Now that you have categorized costs and identified the ways to reduce them, it is time to increase your overall income. Once you are approved for SSI, you may increase your income through various ways:

• If you are in good health, you may choose to work a part-time job.
• Explore opportunities like selling items online, freelancing, or taking surveys.

Research other government programs that might provide additional assistance, such as SNAP (Supplemental Nutrition Assistance Program) or TANF (Temporary Assistance for Needy Families).

According to ssa.gov - “If you get SSI, you can usually get federal benefits like the Supplemental Nutrition Assistance Program (SNAP) and state benefits like Medicaid. SNAP helps pay for food, and Medicaid helps pay doctor and hospital bills. Help from these programs won’t affect your SSI payment.

Your state might also have other programs to help you, like rent rebates and Temporary Assistance for Needy Families (TANF)”.

You may also use some or all of the savings programs mentioned below. If you use more than one savings plan, you will achieve more flexibility in saving and managing money.

• Achieving a Better Life Experience (ABLE)
• Plan to Achieve Self-Support (PASS)
• Property Essential to Self-Support (PESS)
• Low Income Home Energy Assistance Program (LIHEAP)
• A Special Needs Trust
• U.S. Department of Veterans Affairs (VA)

Conclusion

People who depend on SSI assistance programs must remember that budgeting on SSI benefits might take some time and effort to be fruitful. So, recipients must be patient and make adjustments as needed. By following the above-stated tips, you can improve your financial situation and live a more comfortable life on SSI.

Sources:

1. Social Security Administration. (2024). Supplemental Security Income (SSI). https://www.ssa.gov/ssi
2. Benefits.gov. (2024). Understanding SSI Benefits. https://benefitu.org/ssi/what-is-ssi/
3. Investopedia. (2024). How Living Arrangements Impact SSI Benefits. https://www.investopedia.com/how-do-living-arrangements-impact-ssi-benefits-5217852
4. Special Needs Alliance. (2024). Avoiding SSI Reductions for Adults with Disabilities Living with Family. https://www.specialneedsalliance.org/blog/avoiding-ssi-reductions-when-an-adult-with-disabilities-lives-with-family/
5. U.S. Department of Health & Human Services. (2024). Low Income Home Energy Assistance Program (LIHEAP). https://www.acf.hhs.gov/ocs/programs/liheap