Budgeting on Social Security Benefits

Budgeting on Social Security Benefits
  • Type: Social Security
  • Opening Intro -

    An injury or a medical condition that leaves you unable to work is not only life changing, but can also drastically affect your financial situation.

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Each year, millions of Americans, who are are unable to work due to a mental or physical health condition, seek compensation through social security disability benefits (SSD). While SSD benefits help cover the costs of everyday living, it requires many families to create a budget, as the compensation a recipient receives is often less than what he or she made while employed.

If you are in the process of applying for SSD benefits or are currently receiving benefits, here are some tips to make the most of your monthly compensation:

Plan Ahead

A medical condition can worsen and interfere with your ability to work, without warning, leaving you scrambling to make ends meet or figure out how you’re going to pay for your family’s expenses. If you (or your doctor) believes that your medical condition may make you eligible to receive SSD benefits, it’s important to apply as soon as possible as the application process may take up to a few months and benefits are not always immediately available.

According to the Social Security Administration (SSA), SSD recipients will not receive any disability benefits until the sixth full month of a disability, so it’s crucial to apply as soon as work becomes interrupted by a medical condition that is diagnosed to last at least a year.

Take a Look at Your Spending

Even if you’re fairly certain that you are eligible to receive SSD benefits, it’s a good idea to plan for a worse case scenario: if you are denied. Although there are currently about 11 million Americans who receive SSD benefits, about two thirds of first time applicants are denied during their initial application process. If you receive a denial, you have up to two months to appeal your denial, but it will continue to make your financial status difficult.

The best way to be in control of your family’s finances is to take a look at your daily expenses, from your occasional latte and fill-up at the gas pump to the more important bills such as mortgages or student loan payments.

Make Appropriate Cuts

When you’re already going through a stressful life transition, such as a debilitating illness, it may be difficult and overwhelming to “downsize” your life. However, after you’ve taken a close look at your expenses, it’s important to see where you can make some budget cuts, particularly for things you may not be currently using (such as automatic payments on subscriptions).

Although you can’t completely cut out certain household expenses, like utilities or student loan payments, you may be eligible to make reduced payments based on your new income. As with anything related to your finances, make sure that you keep good records and don’t let your debt pile up even when you’re struggling; try to seek help and make arrangements as soon as you can

Money Management reference:

planning a budget

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Last update on 2017-07-25 / Affiliate links / Images from Amazon Product Advertising API

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