Learn How to Budget While Receiving Social Security Income

Learn How to Budget While Receiving Social Security Income

If you receive monthly cash assistance through the federal Supplemental Security Income (SSI) program, creating a budget can help your benefit amount to go even further. According to the Center on Budget and Policy Priorities (CBPP), 8.2 million recipients collected social security income in June of 2018, with the monthly benefit amount averaging at $553.

However, the basic monthly benefit amount for SSI participants who receive no additional source of income is $750 for individuals and $1,125 for couples. If recipients earn any countable income from additional sources, however, their benefit amount will be lower. To learn more about budgeting while receiving federal Social Security payments, review the information below.

How to Calculate Your Monthly Income Amount

To budget your expenses while receiving SSI payments, you must first calculate your total earned and unearned income amount. Generally, your monthly income amount includes:

  • The amount you receive in SSI payments. In 2018, the Federal Benefit Rate (FBR) is $750 per individual and $1,125 per couple. However, your benefit amount may be lower if you receive other types of countable income in addition to your SSI payments. Generally, countable income includes wages earned from a job, unemployment payments, pensions, child support, interest, free food or shelter, in-kind donations, and gifts received from friends or family members.
  • The amount you receive in non-countable income. While your countable income reduces the amount you will receive in SSI payments, your non-countable income does not. Examples of non-countable income include food stamps, need-based public benefits, loans, and a portion of your earned wages.

In some cases, you may qualify for additional Social Security benefits as well. If you qualify for additional benefits, you can add these amounts to your total monthly income. However, your SSI amount may be lower if you also receive Social Security retirement benefits. Once you calculate your monthly income amount, you will need to determine how to spend these earnings on the things you need to survive, such as housing, food and medical expenses.

For assistance in calculating your monthly income amount, contact the Social Security Administration (SSA) at 800-772-1213 or visit your local SSA field office.

Calculate Your Expenses

Once you know your monthly earned and unearned income amount, you can begin to create your budget. With your budget, you will determine how much of your SSI benefits amount will go toward your living and medical expenses (or the things you need to survive). For instance, your mandatory monthly expenses may include:

  • Housing costs such as a mortgage or rental payments. In most cases, your SSI payments will need to cover a certain percentage of your monthly housing costs. However, this percentage will vary depending on your housing situation and the amount you pay each month.
  • Food expenses. After you deduct your housing costs from your SSI amount, consider the amount you plan to spend on food each month. If you qualify for assistance under the Supplemental Nutrition Assistance Program (SNAP) or the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), your food expenses may be lower. If you live in California, however, your monthly SSI benefit amount may be higher, but you may not qualify for SNAP benefits.
  • Health costs. In many cases, you may also qualify for Medicaid and/or the Children’s Health Insurance Program (CHIP). In most states, Medicaid recipients receive free or low-cost medical care, including expenses for prescription medications, hospital stays and doctor’s appointments. However, be sure to factor in your medical costs when budgeting your SSI payments.
  • Other needs, such as personal care items and utilities. Put together a list of your utilities and additional expenses, including credit card or loan payments, birthday gifts for friends or family members, and telephone or internet costs.

Once you have calculated your monthly expenses, total them and subtract this number from your monthly income amount. For example, if your total monthly income is $950 and the amount of your housing, food and health costs comes to $791, you would have $159 leftover for the month.

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Consider any Additional Costs

While your main expenses will include the things you need to survive, additional costs may pertain to the things you would like, including entertainment. If the cost of your “needs” does not exceed your monthly income amount, you may have money left over for your “wants”. These may include movie or concert tickets and restaurant meals. After you calculate your essential monthly expenses, for instance, you may find that you have $159 leftover for entertainment that month. Then, you could designate a certain percentage of this amount to dining out or seeing a movie, or you could put the remaining amount toward other bills.

How to Cut Costs While Receiving SSI Payments

When creating your budget, you may find that you spend more money than you earn. In this case, you would need to come up with a plan for cutting costs wherever possible. If you find that you are spending too much money on gifts for friends, for instance, try making homemade gift items instead. If you are overspending on groceries, try planning your meals each week or take advantage of cost-effective foods such as canned beans, frozen vegetables and pasta.

Other ways to cut costs may include the following:

  • Downsizing from a larger home or apartment to a smaller space
  • Purchasing secondhand items
  • Enrolling in one or more prescription co-pay programs
  • Ditching your central heating or cooling system for single-room units
  • Canceling your current mobile phone plan and switching to SafeLink Wireless
  • Looking for Section 8 or government-subsidized housing options
  • Applying for food stamps if you haven’t done so already
  • Taking advantage of local food banks
  • Looking into free or discounted transportation options

Additional Tips for Creating a Budget

When receiving SSI payments, it may take a month or two to create a budget that best meets your needs and wants. However, saving your receipts and organizing them by category and month can help you to create the most accurate budget. For instance, possible categories may include health expenses (such as any co-pays or prescription costs), groceries, personal care items (such as soap and shampoo), transportation, clothing and entertainment. At the end of the month, add up your expenses and subtract them from your total income amount.

Related article: Learn How to Eat Healthy on a Budget

By Admin