A couple sits on a bench in Hollywood, Florida.
Despite the high levels of polarization plaguing American politics today, retirement policy has remained an area for bipartisan cooperation. Congress has passed two major pieces of retirement policy legislation in recent years, and red states, blue states, and purple states have established state-facilitated retirement savings programs to help working Americans save for their retirement. It is encouraging to see this bipartisanship continuing in support of another important retirement savings issue: updating the outdated asset limits for the Supplemental Security Income (SSI) program.
SSI provides monthly cash benefits to approximately eight million Americans who are elderly or disabled and who have very little or no income. These are extremely modest benefits: the maximum benefit amount is only three-fourths of the federal poverty level. Nevertheless, these benefits are crucial for the economic security of SSI recipients. Unfortunately, the program also imposes asset limits on participants that were set nearly forty years ago. These asset limits are so low that they lock into poverty many of the people the program is designed to help.
There is growing recognition among federal policymakers that these asset limits need to be updated. A bipartisan, bicameral piece of legislation would update these asset limits to $10,000 for an individual (from $2,000) and $20,000 for a couple (from $3,000). Crucially, it also would index the limits to inflation going forward. Raising these limits would bolster retirement security by, for example, allowing working SSI recipients to participate in their employer’s 401(k) plan, something many currently avoid in order to stay under the abysmally low limits.
The momentum behind much of retirement policy in recent years has been toward increasing access and boosting savings levels. Recent legislation has made it easier for employers to automatically enroll employees in plans, to automatically increase contribution amounts, and even to re-enroll workers who opt out of participating in an employer plan. SECURE 2.0 reformed the federal Saver’s Credit to make it a refundable Saver’s Match beginning in a few years. That was a very positive move for low-income workers who may otherwise struggle to save for retirement. Meanwhile, SSI’s asset limits have been called “one of the most regressive, anti-saving provisions in federal law.”
There is strong support within the business community for updating SSI’s asset limits, including from the U.S. Chamber of Commerce. The JPMorgan Chase
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JP Morgan Chase CEO Jamie Dimon affirmed his support of this legislation at a Senate Banking Committee hearing this month. “This definitely should be fixed,” Dimon said while appearing with the heads of seven other major banks, all of whom also indicated their support for updating SSI’s asset limits.
Given the realities facing most SSI recipients, we shouldn’t expect them to accumulate significant amounts of retirement savings, but the data indicate that most Americans, regardless of disability status, don’t save enough. For example, a report released this summer found that the typical member of Generation X only has $10,000 saved for retirement. However, the current asset limits not only prevent most SSI recipients from saving for retirement, but also from saving for emergencies, which is shown to promote financial stability and security.
All Americans should be empowered to save for retirement and federal policy should support and encourage them to do so. Retirement is only becoming more expensive, which underscores the need for everyone to save more.
As we enter a holiday season that celebrates generosity and service to others, updating SSI’s asset limits should be on the wish list of everyone who values retirement security.
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