There are many people receiving Social Security Disability Insurance (SSDI) who struggle to make ends meet. The income limits imposed on them through Social Security’s rules on Substantial Gainful Activity (SGA) certainly do not help. In such a case, investing seems like a good option to make some side income. But can you invest while on SSDI?
Yes, you absolutely can. SSDI gives its beneficiaries the option to invest in various ways, through stocks, rental properties, and more. The income from this is generally considered passive income and does not affect your SSDI benefits.
Keep reading below as we discuss more about investing while on SSDI.
Can You Invest While on SSDI?
Income can be categorized in two ways: earned and unearned. Earned income is money that a person makes when they work for either an employer or themselves, and it can be considered part of the person’s total income.
It includes compensation in the form of wages, salaries, tips, and incentives, as well as net revenues from entrepreneurship, freelance employment, specific royalties, and union strike benefits. This kind of earning will count toward your monthly limit for SSDI eligibility.
Earnings from sources other than a regular job or self-employment are considered “unearned income” and are, therefore not subject to the monthly limits on income. The following are some examples of income that was not earned:
- Benefits from Social Security Disability
- Pensions
- Gifts
- Inheritances
- Dividends
- Interest
Some recipients of Social Security Disability Insurance also get income through investments, such as stocks, trusts, bonds, or rental property, or from other sources of passive income.
Remember that the Social Security Administration (SSA) is likely to request a closer look at your finances if you have income from investments.
The available technology helps identify information on potentially fraudulent investment earnings. It is not unreasonable to think that there will be inquiries and a review.
Can I Invest in Rental Property While on SSDI?
If you want your disability payments to remain unaffected by revenue from rental properties, you must verify that the properties qualify as rentals under the Social Security Administration guidelines.
When calculating eligibility for disability payments, a rental property may not count as one if it meets any of the following criteria:
- If the individual stays for less than seven nights.
- If the individual uses less than 30 days of substantial personal services like cleaning services.
- If the individual is not involved in any way, shape, or form in the maintenance of the rental properties.
What Do I Do If My Benefits Are Discontinued?
Earning more than the SGA threshold can result in the denial of your SSDI benefits. If the Social Security Administration judges that you are no longer disabled or that your medical condition has gotten better to the point where you can earn an income higher than the SGA through gainful employment, they will terminate your benefits.
The Social Security Administration will undertake a continuous disability review (CDR) of your case every one to seven years, depending on whether your conditions are expected to improve or not.
Your income and assets must be below the limits set by the Social Security Administration. Your benefits could be at risk if your investment income or assets are higher than the required threshold.
If the Social Security Administration decides to stop paying you SSI or SSDI benefits, you have the right to file an appeal. The appeals procedure consists of the following stages:
Reconsideration
You have the right to get a second opinion from a person who did not take part in the initial decision to terminate your benefits (known as a “reconsideration”). Send in your request via the Internet.
Hearing
You have the right to request a hearing in court. A phone call, video chat, or in-person appearance might all serve as venues for the hearing.
Appeals Council Review
An appeals council may decide your case or remand it to an administrative law judge (ALJ) for further consideration.
Federal Court Review
There is the possibility of seeking legal review from a federal court if you have a problem with the decision of your appeal.
Tips for Investing while on SSDI
If you’re on a tight budget, it could seem impossible to put together just enough money to begin building an investment portfolio.
You should still save some money in case of an unexpected expense, even if you don’t invest. If you want to set aside thousands of dollars, start with small amounts, like $5 now and then.
Creating a budget could be the first move. Without a clear picture of our spending habits, it’s tough to figure out where we can make cuts.
Many people find it eye-opening to keep track of their spending, purchases, income, and payments for a few months. You can find budgeting apps and websites that don’t cost anything to use.
Before investing, it’s wise to weigh the potential returns against the interest and tax payments. It could be wiser to clear up any high-interest debts you have before putting money into the market. Sometimes it makes more financial sense to eliminate high-interest debt than to invest in a rising stock market.
In the case of low-interest loans, you may want to consider investing some of your spare cash. Nevertheless, you should still ensure you have sufficient funds for your monthly payments in order to avoid any fees.
Investment Options for SSDI Beneficiaries
If your budget is tight, it may be necessary to search for businesses that charge little or no commission. You can open an account with some investing programs with a relatively small sum of money. The following are a few investment choices available to those with a fixed income due to disability.
Roth IRA
Withdrawals from a Roth individual retirement account (Roth IRA) are not subject to taxes once the retirement age has been reached. If you are low-income, the fact that Roth IRA contributions are not tax-deductible may work to your advantage.
Index Funds
Index funds are a low-cost way to invest in certain markets. This is typically a group of equities and bonds that track the performance of a certain market segment. It is important to think about the minimum investment amount and expenses before making any investments.
Conclusion
In conclusion, the SSA does provide SSDI beneficiaries with the opportunity to invest and make some passive income. This will not affect their benefits. However, there are a few things that can be done if it does end up with the termination of benefits.
2 Responses
Hi! I am older, disabled and have been trying for the past two years to move forward, disability and all, with opening a very, very small baking business. However, two weeks ago, I was informed by the County of San Diego (Food Cottage Program) as well as the Department of Rehabilitation, that neither entity would be able to accommodate my medical condition and therefore, could be of no service to me. Department of Rehab also hinted at my “age” being a factor and that, coupled with my disability, was just something they could not help me with.
I have to do something and decided to start learning about passive income investing this year, but in particular I want to learn how to be part of a group that lends money to someone who is looking to start a business (or entrepreneur), since at this point and time in my life, I cannot start my own.
Would you be able to point me in ANY direction be it books,and do you know anyone at all who is disabled who runs their own business or who is actively involved in passive income ventures?
I am also on Section 8 and receive Food Stamps. I have to say, I am really, really disappointed that the Department of Rehabilitation would not take my case. I went through their program about 25 years ago but because there is no cure for my condition, I think they do not want to expound the energy.
On a side note. I spoke to a couple of businesses in my area and they told me they are REQUIRED my California law to accommodate a disability but the County told me that it depends. The accommodation cannot be a hardship for the owner/business.
Do you know what I am asking them to accommodate me with? A chair… a chair in a community kitchen. The issue is the kitchen. The chair is considered a hazard.
Unbelievable…..!
Unfortunately, most disability attorneys would not be able to assist with passive income advice. A tax advisor may be able to help determine what is earned income, which must remain below Substantial Gainful Activity for the current year. If you are looking for help with the disability accommodations issue, we suggest reaching out to your local Legal Aid Society for recommendations of someone who might be able to provide assistance.