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Nation's Disability Policy Makes It Hard to Save for Retirement

Goodwill Industries Calls for Passage of H.R. 3696 to Encourage Work and Savings

October 8, 2007

Rockville, MD – Goodwill Industries International is calling on the U.S. House of Representatives to pass H.R. 3696, which would modify the nation’s disability policies to exclude 401(k) and IRA retirement accounts from federally funded means-tested benefits, so that all Americans can pursue a path to self-sufficiency and financial independence.

In 2006, Goodwill agencies nationwide helped more than 156,000 people with disabilities, many of whom rely on the Social Security Administration’s Supplemental Security Income (SSI).  Goodwill funds its job training programs by selling the public’s donations of clothing and household items in Goodwill stores; roughly 83 percent of Goodwill’s operating revenue is channeled directly into its employment services. 

“Medical advances and assistive technologies are creating more opportunities for people with disabilities to work and become self-sufficient,” says George W. Kessinger, President and CEO of Goodwill Industries International. “But people fear that if they work and save for retirement they will not be eligible for assistance when they need it.”

When people with disabilities are placed into a full-time position for the first time, they can do things that many people take for granted, such as opening a checking account and even making small contributions to their employer’s 401(k) plan.  But existing disability policy creates a disincentive to work and is feeding fears that if people do work and save for retirement they will lose their eligibility for income support and Medicaid.

“Our national savings rate is at historic lows.  We need to find ways to encourage savings by all workers,” says Rep. Ron Lewis (R-KY), who introduced the bill.  “H.R. 3696 is an important first step in the right direction to address this issue for individuals with disabilities.” 

According to the U.S. Census Bureau, more than one out of eight people – or 12.3 percent of the population – lived at or below the poverty level in 2006.  Historically, three times as many people with disabilities live in poverty, with only one out of every three people with disabilities reporting being employed, even part-time.

Under the Social Security Administration’s Supplemental Security Income program, eligibility is limited to $2,000 in assets for an individual and no more than $3,000 for couples.  Medicaid eligibility is also linked to SSI eligibility.  This asset test often forces people to deplete modest retirement savings before qualifying for the benefits. 

Goodwill Industries urges Congress to pass H.R. 3696 so that all Americans, including people with disabilities, can work and sustain their financial independence for the long-term.