A First Step Towards Eliminating Savings Penalties

Last week, Senator Sherrod Brown (D-OH) introduced the Supplemental Security Income Restoration Act (S. 2753) to raise asset limits (otherwise known as savings penalties) on the Supplemental Security Income (SSI) program. A similar bill, H.R. 4280, was introduced earlier this fall on the House side.

Currently, the SSI program only allows recipients to have $2,000 in assets individually or $3,000 as a couple. These limits, which have not increased since 1989, prevent families from saving and penalize couples for getting married. Under Sen. Brown’s new legislation, recipients would be allowed $10,000 individually or $20,000 as a couple. This first step towards the reduction of savings penalties would let SSI recipients work, save and build wealth without losing their safety net.

Additionally, the bill allows for earnings of up to $399 per month from a job and up to $123 per month from other assistance sources without a deduction in supplemental income. Each of these new limits would also be indexed to inflation.

Savings penalties push families deeper into poverty by discouraging households from saving for the short and long term. While the SSI program provides a safety net for the elderly and persons with disabilities, the asset limits prevent recipients from saving for their future.

Because savings penalties are counterproductive, 36 states and Washington, DC have removed limits from their Supplemental Nutritional Assistance Program (SNAP). But because SSI is managed by the federal government alone, it requires congressional action, like Sen. Brown’s new bill, to change the limits.

In the future, Congress can take further steps that would have a big impact of families' abilities to save. The most effective step is to remove savings penalties from Temporary Assistance to Needy Families (TANF), Low Income Home Energy Assistance Program (LIHEAP) and SNAP. Through this federal action, families could feel more security about their long-term savings and worry less over whether beginning to save for a rainy day will cause them to lose their benefits.

Senator Brown’s legislation marks an excellent start to reducing savings penalties. But we need Congress to continue to enable low- and moderate-income Americans to build wealth by removing barriers to saving. Email your Senators and Representative and ask that they sign on to the Supplemental Security Income Restoration Act to help individuals and families save for their futures.

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