Study sheds light on financial health of disabled

Overall it’s not a pretty picture. More than a quarter century after the passage of the Americans with Disabilities Act—designed in part to assure that individuals with disabilities can achieve “economic self sufficiency”—economic life for disabled Americans is a struggle far more often than it is for those without disabilities.

Data from a new report from the National Disability Institute sheds light on many specific details of the situation, providing a benchmark for public- and private-sector efforts to assist.

The 70-page report, Financial Capability of Adults with Disabilities draws on data from the 2015 FINRA Investor Education Foundation National Financial Capability Study. (The Financial Industry Regulatory Authority, is a private securities industry self-regulatory body; successor to the National Association of Securities Dealers.) The FINRA survey sample was 27,564 adults 18 and older across the U.S.

The National Disability Institute report contrasts attitudes, behaviors, and knowledge between people who are disabled and those who are not in four main areas: Making Ends Meet; Planning Ahead; Managing Financial Products; and Financial Knowledge and Decision Making.

In the 18-64 age range, the survey found that one in nine have a disability, and, of those, one in three are employed. Of those who work, many work part time.

Here are selected summary points for each of four main survey topics, comparing the situation for disabled individuals with those without disability:

Making Ends Meet

Respondents with disabilities:

• are more than twice as likely to find it “very difficult” to cover expenses and pay bills (23% versus 9%).

• are twice as likely to have past-due medical bills (38% versus 18%) and much more likely to forgo medical care because of costs (46% versus 25%), although they are equally likely to have health insurance.

• experience higher levels of financial stress (people with disabilities are twice as likely to be late with a mortgage payment) and are almost twice as dissatisfied (41% versus 23% not at all satisfied) with their current financial condition.

Planning Ahead

Respondents with disabilities:

• are less likely to have set aside three months of emergency funds (30% versus 46%).

• are equally likely to have a household budget (59% versus 56%), but less likely to have set long-term financial goals (44% versus 61%).

• are less prepared for retirement with fewer having figured out their retirement savings needs (31% versus 41%); less likely to have a retirement account (40% versus 62%); and more worried about running out of money in retirement (63% versus 59%).

• are less willing to take any risk on financial investments (36% versus 24%).

Managing Financial Products

Respondents with disabilities:

• are less likely to have checking (84% versus 91%) and savings accounts (61% versus 77%) and more likely to be unbanked (12% versus 6%).

• are more likely to use prepaid debit cards (36% versus 24%).

• are less likely to own a home (45% versus 58%); but among those who are homeowners, more than twice as likely to be “underwater” (28% compared to 13%).

• are less likely to have any credit cards (63% versus 80%); but among those who had credit cards, are more likely to engage in expensive credit card behaviors (56% versus 40%).

• are more likely to have bad debt (38% versus 18% have unpaid medical bills).

• are more likely to use non-bank borrowing methods (42% versus 25%).

Financial Knowledge and Decision Making

Respondents with disabilities:

• have fewer correct responses on a test of basic financial concepts (44% versus 53% average correct answer score on a financial literacy test).

• have a lower self-perceived level of financial knowledge (70% versus 81% rated themselves positively).

Financial programs available

As spelled out in the NDI report, adults with work disabilities may be eligible for two types of Social Security assistance.

1. Social Security Disability Insurance (SSDI) serves people with disabilities who have made sufficient contributions to the Social Security Trust Fund and are deemed unable to work because of their medical impairment. Benefit levels are calculated based upon their prior wages, the report states.

2. The Supplemental Security Income (SSI) program provides monthly cash assistance to people who are disabled or elderly and have little income and few assets, says the report. Because they typically have no other source of income, more than half of recipients receive the basic monthly SSI benefit. In 2015, that was $733 for an individual and $1,100 for a couple.

In late 2014 Congress, recognizing the additional costs faced by adults with disabilities, passed the Achieving a Better Life Experience (ABLE) Act, which President Obama signed into law. According to the NDI report, the law permits eligible individuals to establish tax-advantaged savings and investment accounts to help meet disability-related costs without losing eligibility for Social Security benefits. Contributions are limited to $14,000 annually on an individual account.

Distributions, says NDI, can be used to for costs related to education, transportation, employment, housing, health care, and other purposes. The institute states that as of November 2017, 30 states and Washington, D.C., had launched ABLE programs. NDI estimates that as a result ten million individuals with disabilities are eligible to open an ABLE account.

Opportunity for financial institutions?

The report adds this caveat: “…Account holders must have the information, guidance and sophistication to sign up for the program, contribute (or have others contribute) to the account, understand investment options and use the money responsibly. Developing the financial capability to use programs such as ABLE accounts can offer customers a roadmap to increased financial health.”

Though not stated in the report, ABLE-related guidance and programs would seem to be an opportunity for banks and savings institutions. NDI did note that several federal agencies, including FDIC, Treasury and the CFPB, are in the process of developing new educational materials relating to ABLE accounts.