Supplemental Security Income (SSI), the Social Security program designed to help the most vulnerable Americans with disabilities meet basic needs, has seen several successful efforts to encourage recipients to work, but still discourages savings, says a recent Woodstock Institute letter to Illinois lawmakers.
One recent proposal, introduced by Congresswoman Tsongas (D-MA) and Congressman Petri (R-WI), promises to remove the savings disincentive. Currently, potential SSI recipients are disqualified if they have as little as $2,000 in savings for an individual or $3,000 for a couple and are required to spend down retirement savings. The SSI Savers Act of 2010 (H.R. 4937) would raise the asset limit to $5,000 for a single filer and $7,500 for joint filers and index these limits for inflation, exclude retirement savings from consideration in the asset test, and remove the requirement that SSI recipients draw down their retirement savings.
A recent asset poverty index developed by CFED, a savings policy center, found that nearly 22 percent of Illinoisans lack sufficient resources to meet basic needs for three months in the event of injury or unemployment, making policies that incentivize saving more important than ever. Modest savings offer low-wealth people security against emergency expenses. An assistance program for the most vulnerable Americans that discourages even modest savings contradicts existing asset building efforts, the letter notes.
Woodstock Institute is calling on Illinois lawmakers to co-sponsor the SSI Savers Act of 2010.