Financial Education: An Underused Saving Account for the Disabled
By Susan Beacham
February 10, 2017
I have always been a saver. I was raised to think about money and my financial future, and today whenever I hover over a shining new purchase I remind myself that I do not want to be waiting on tables as a 75-year-old. This singular image keeps me focused.
I suspect most Americans do not save more because there is no such image, or motivation, in front of them. They have not been able to picture their future self, and they feel invincible. They will save…next year. YOLO is the battle cry today. When the inevitable “rainy day” arrives, it catches them by surprise.
In this sense, people with disabilities and their supportive families have a leg up. It’s not one any of us would wish for. But these people are driven to save earlier because the rainy day is always there. This is true whether the disability is a childhood one, from birth, or one that has happened due to an accident or major injury. In cases of disabilities due to injury, the person(s) in question will most definitely look at the financial help options possible-from donation funds (maybe) to TPD Insurance claims, a back-up plan is always necessary. This type of insurance becomes even more vital to consider for people who work in hazardous locations where the chances of a disability through injury are higher. Nevertheless, the plight of disabled people is such that they always need to be thinking one step ahead in terms of finances.
They often have large and unusual expenses to meet such as making home modifications or paying for their medical bills. For this reason, they tend to save money anywhere possible, perhaps by choosing to rent a stairlift instead of buying one
or cutting down on unnecessary expenses. They know they have needs that government benefits will not cover. They do not require any helpful images to spur saving-only programs that make it easier. For instance, an NDIS program provided by Australia is one of the most beneficial programs for the disabled. They can get benefits, including assistance with healthcare, home care aid, medicines, treatments, etc. Moreover, the institutions connected with NDIS also may use home care package software that can make client management a lot easier as well as help them in providing the best facilities to their clients. Such support can change the lives of people with disabilities.
Furthermore, since December 2014, people with disabilities have enjoyed an expanded ability to save in tax-advantaged accounts. Even though the provision is two years old, it is not widely understood and used. For example, only 15 states make the special accounts available-but, since 2015, any disabled person is now free to enroll in any state’s program provided that the program is accepting out-of-state residents.
Before the federal Achieving a Better Life Experience Act, or ABLE, special savings accounts for the disabled were capped at $2,000 a year before eroding certain government benefits. ABLE expanded that limit to $14,000 a year.
An ABLE account works like a college or health savings account, allowing people with disabilities to fund essential expenses with tax-advantaged savings. Qualified individuals can save up to $100,000 in ABLE accounts without risking their Social Security benefits. If an ABLE account ever exceeds $100,000, Social Security payments are suspended until the balance has been spent down below that threshold.
This is critical information for anyone with a disability, for their families, and for community leaders and educators in a position to help or advise. The ABLE National Resource Center is a good first stop for anyone looking to open an account. The center has an online tool that allows you to compare state plans and better understand who can contribute, and the expanded contribution allowances and consequences.
ABLE accounts allow people with disabilities to take better care of their financial future-and not be among the one in three Americans with $0 saved for retirement.
If you or your students, family, or other charges aren’t eligible for this tax-advantaged savings vehicle-count your blessings, first. But get the message. Don’t wait for a reason to encourage saving to hit you square in the face. Try seeing yourself like I do: waiting on tables at 75. Care for dessert?