How do you know if you"need" an ABLE account?
Tips for helping exhausted and overwhelmed parents make the decision.
I’ve lost track of how many times I’ve seen comments on Social Media or heard someone say, “you should get an ABLE account” when they find out the individual, or a parent’s child, has a disability. Yes, ABLE accounts can be fantastic tools and I’m very happy Congress made them possible back in 2014 (H.R. 647). However, I don’t think they should be the first thing everyone with a disability turns to. Let me start with an overview of what an ABLE account is. This will, by design, be very broad, I encourage you to check out the ABLE National Resource Center’s website if you’d like to learn more.
An ABLE account is a tool meant to allow those with disabilities to accumulate more than $2,000 in assets and keep their means-tested benefits - Medicaid, SNAP, Housing Vouchers, etc. It is not, in the truest sense of the word, a “savings account”. There is an option to put the money into a savings account, but every state with an ABLE account has at least (3) investment options as well.
Having the option to invest your funds is an important one. You only have to look at the current inflationary environment (this is being written in July 2022) to see how quickly the spending potential of one’s savings can be eroded. Investing the money that will not be needed for at least (5) years gives you the opportunity to at least keep up with inflation. Nothing is guaranteed, but throughout history market returns have risen consistently, recovering after every Recession.
You’re only allowed to put $16,000/year (2022) into an ABLE account. Additionally, if you are on SSI and your account balance exceeds $100k your SSI benefits will be suspended. SSI should be reinstated as soon as the balance drops below $100k, but I wouldn’t rely on the Social Security Administration. If you have an account and you’re receiving SSI keep the balance below $100k.
Here is an overview of the criteria I use when deciding if I should recommend an ABLE account. Obviously, I can’t cover every possible scenario, and I’m not going to try. I will concede there are going to be opportunities that I am overlooking in which people should probably open an ABLE account. With that disclaimer out of the way, let’s dive in.
