Saturday, September 24, 2022

How To Borrow From Social Security

Don't Miss

Personal Loans For People On Disability Benefits: Bad Credit

How to Get A Payday Loan On Social Security (2018)

Personal loan approvals for people relying on disability benefits hinge on the regular government check rather than proof of employment. Lenders love the reliability baked into these publicly-funded programs!

However, requesting a small principal amount is the most critical factor.

First, individuals with low fixed incomes do not qualify to borrow vast sums of money.

Second, many disabled people have bad credit because their income barely covers basic living expenses, yet another reason to keep your request small.

Finally, SSI recipients have a resource limit of $2,000, so you do not want to over-borrow and risk your eligibility.

Personal Loans With No Social Security Number

For long, this myth has been propagated by brokers and middlemen that if you are not a resident of the U.S. and you lack an SSN, you will not be able to get a personal loan. Well, this myth has been busted. Today, even if you are an immigrant with no SSN, you can open a bank account or apply for a personal loan. All you need is an ITIN .

If you are paying federal taxes, you can apply for an ITIN. Follow these 4 steps as mentioned below:

  • Fill out the Form W7.
  • Include proof of identification as approved by the IRS.
  • File your income tax return
  • Submit everything to the IRS office.
  • This entire process takes 4 to 6 weeks to complete once you complete all the documentation.

    Where Do Social Security’s Asset Reserves Really Go

    In case you haven’t heard, America’s top social program isn’t on the best financial footing. According to the latest report from the Social Security Board of Trustees, Social Security is staring down a $13.9 trillion cash shortfall between 2035 and 2093, with the expectation that its $2.9 trillion in asset reserves will be completely exhausted in 15 years.

    On one hand, there is solace in knowing that Social Security isn’t going bankrupt, which is a function of two of the program’s revenue sources being recurring . On the other hand, there’s no sugarcoating the worry that would follow if benefit cuts of up to 23% are passed along to then-current and future retired workers, as of 2035. Remember, more than 3 out of 5 current retirees lean on Social Security for at least half of their monthly income.

    How did Social Security get into this mess, you ask? That’s a source of contentious debate, and it’s also a land mine of misinformation.

    Read Also: Can I Locate Someone By Their Social Security Number

    The Borrowing Averts Inflation Losses And Gives Social Security Billions In Interest Earnings

    In 2020, The Motley Foolâs Sean Williams argued that the funds the government is borrowing from Social Security are capital that would otherwise be losing money to inflation.

    Williams also pointed to the billions in interest that Social Security collected. In 2018, $83 billion in interest income was collected by Social Security, he wrote. If the folks who believe that Congress stole from Social Security got their way, and the federal government repaid every cent it borrowed, Social Security would have lost out on this $83 billion in interest income in 2018.

    Social Security lent money to the Treasury for years. Why not start borrowing when its $2.9 trillion is gone?

    Read Also: Can I Locate Someone By Their Social Security Number

    How Are The Trust Funds Invested

    How To Borrow From Social Security

    The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government. The U.S. government has never defaulted on its obligations, and investors consider U.S. government securities one of the worlds safest investments.

    By the end of 2020, the trust funds had accumulated $2.9 trillion worth of Treasury securities, earning an average interest rate of 2.5 percent during that year. The Social Security Administration provides monthly reports on the investment holdings of the trust funds, their maturities, and interest rates. The trustees project that the trust funds will earn $70 billion in interest income in 2021.

    Also Check: Social Security Find Person

    Recent Activity And Financial Status

    The 2015 Trustees Report Press Release stated:

    • “Income including interest to the combined OASDI Trust Funds amounted to $884 billion in 2014.
    • Total expenditures from the combined OASDI Trust Funds amounted to $859 billion in 2014.
    • Non-interest income fell below program costs in 2010 for the first time since 1983. Program costs are projected to exceed non-interest income throughout the remainder of the 75-year period.
    • The asset reserves of the combined OASDI Trust Funds increased by $25 billion in 2014 to a total of $2.79 trillion.
    • During 2014, an estimated 166 million people had earnings covered by Social Security and paid payroll taxes.
    • Social Security paid benefits of $848 billion in calendar year 2014. There were about 59 million beneficiaries at the end of the calendar year.
    • The cost of $6.1 billion to administer the program in 2014 was 0.7 percent of total expenditures.
    • The combined Trust Fund asset reserves earned interest at an effective annual rate of 3.6 percent in 2014.”

    Some basic equations for understanding the fund balance include:

    • Fund ending balance for a given year = Fund starting balance + program revenues + interest – program payouts
    • Program annual surplus = program revenues + interest – program expenses
    • Program annual cash surplus = program revenues – program expenses

    Disability Discharge Tips And Faqs

    Q: Is it possible to work and still be eligible for a disability discharge?A:Even though the government may say otherwise, the answer should be yes. You are allowed to earn less than 100% of the poverty line for a family of two during the three year watch period after a final discharge is granted. This allows you to explore whether you can get back in the workforce.

    Q. Can I qualify if I have a disability that prevents me from working in the occupation for which I was trained?A: Not if you are able to work in a different occupation. To be eligible, your disability must make you unable to engage in any type of substantial gainful activity.

    Q: Is evidence of a Social Security or Veterans Affairs disability decision sufficient to qualify for a student loan discharge?A: For V.A., yes, if you have been determined to be unemployable due to a service-connected condition. For Social Security, in some cases, yes as of July 1, 2013. If you are receiving Social Security Disability Insurance or Supplemental Security Income benefits, you can submit a Social Security Administration notice of award for SSDI or SSI benefits stating that your next scheduled disability review will be within 5 to 7 years from the date of your most recent SSA disability determination as a way of proving eligibility for a disability discharge. You may do this instead of submitting a certification from your doctor.

    Q: Can I apply again if I was denied the first time?

    1. Pay stubs showing year-to-date income,

    Don’t Miss: How To Find Out My Current Social Security Benefits

    The Us Treasury Is Required By Law To Issue Bonds With Social Security Surplus Money

    According to PolitiFact, a Social Security surplus has been building ever since former President Ronald Reagan, anticipating Baby Boomers reaching retirement, hiked payroll taxes in 1982. The U.S. Treasury is required by law to invest surplus Social Security funds in special Treasury bonds.

    A market rate of interest is paid to the trust funds on the bonds they hold, and when those bonds reach maturity or are needed to pay benefits, the Treasury redeems them, the Social Security Administrations press office explains.

    The federal government can spend the proceeds from U.S. Treasury bonds on a multitude of uses, but it must pay the money back with interest, according to AARP.

    Tax Consequences For Death And Disability Discharges

    VERIFY: Did Congress take money from Social Security?

    Under a law recently passed by Congress, loans cancelled because of disability or death after December 31, 2017, will not be taxed. More information can be found in this blog post. The Departments web site also includes information about tax consequences for earlier discharges and a warning that there may be state tax consequences even if there are no federal tax consequences. It is a good idea to consult a tax professional for more information.

    You May Like: How To Find Out My Current Social Security Benefits

    Opinion: Social Security Can Be Fixed Heres How

    Regarding Mitch Danielss Jan. 28 Thursday Opinion column Rescue the safety net? Weve missed the train.:

    Mr. Daniels bemoaned the future insolvency of Social Security and Medicare and dramatically stated that entitlements are a greater problem than even the coronavirus pandemic or climate change. Despite Mr. Danielss grave concern, the federal government has never borrowed money to pay for Social Security the program has always been financed by payroll taxes. Social Security is not a debt burden on the federal budget. And Medicare has been managed with occasional tweaks to keep the program solvent . If needed, raising the eligibility age is one of several ways to contain Medicare and Social Security costs.

    Mr. Daniels also touted his lifetime efforts urging greater care of our public finances, to avoid serious, permanent damage to the economy. But his self-praise differs from his actions when serving more than two years as then-President George W. Bushs director of the Office of Management and Budget. For example, Mr. Danielss fiscal 2002 and 2003 OMB-prepared budgets to Congress resulted in more than $500billion in deficits. Also, Mr. Daniels did not complain about Mr. Bushs 2003 Medicare Modernization Act, which cost about $400 billion and was funded by borrowing.

    Eric Murchison, Vienna

    Alan Neuschatz, Chevy Chase

    The Best Age To Start Collecting

    There are two schools of thought about whether to start collecting Social Security at 62 or wait.

    The first is that everyone should start getting their money out of the system as soon as possible.

    This theory is based on two things:
  • You have no assurances that you will live to full retirement age.
  • You must live deep into retirement to make up the difference in the two potential payouts, the one you can collect at 62 and the one you can collect if you wait until full retirement age.
  • In other words, getting some benefits now is better than the promise of more benefits later.

    The second theory states that you should wait until full retirement age in order to collect larger monthly sums. If you live long enough, this option will be more profitable.

    Lets take a closer look at your total payout potential based on the age at which you begin collecting benefits. Assume your full benefit amount would be $1,000 per month, or $12,000 each year, and your full retirement age is 67. Heres the total amount you could receive from the Social Security program.

    Starting benefits at age 62 would mean more money overall if you dont live past age 79. However, if you live to 79 or older, youd receive more money during your lifetime if you began earning benefits at age 67.

    Also Check: When Social Security

    Future Of Social Security

    Fast Fact

    An increase in eligible participants combined with an increase in life expectancy is straining the Social Security program. Because of the financial burden this created, Social Security was amended in 1983, changing the age people can collect full Social Security benefits.

    As a result of the 1983 amendments, the retirement age will increase between 2003 and 2026 from age 65 to age 67 with an 11-year gap at which the retirement age will remain at 66, depending on the year of birth.

    Economic analysts predict that the Social Security system eventually will pay out more in benefits than it receives in payroll taxes. Analysts have long warned of this shortfall, and they predict the program could be in jeopardy as of 2035.

    It is anticipated a reduction in benefits of about 13% or an immediate increase in payroll tax rate from 12.4 to 14.4%, or a little of both, will be needed to allow full payment of scheduled payments for the next 75 years.

    As the challenges to meet the needs of millions of retirees continue, policymakers and politicians continue to argue about revamping or privatizing the program. The recent economic downturn has affected jobs and savings programs, further weakening the program. With so many people dependent upon Social Security for retirement benefits, its vital to understand the system and its limitations, as well as to make changes before time runs out.

    5 Minute Read

    Consider Getting A Loan Instead Of Taking Funds From Your Nest Egg

    How To Borrow From Social Security

          Many retirees think they cant take out a loanfor a car, a home, or an emergencybecause they no longer receive a salary. In fact, while it can be harder to qualify to borrow in retirement, it’s far from impossible. One thing generally to avoid, according to most experts, is borrowing from retirement planssuch as 401s, individual retirement accounts , or pensionsas doing so may adversely affect both your savings and the income you count on in retirement.

          You May Like: Can You Check The Status Of Your Social Security Card

          President Trumps Record On Social Security

          In 2016, the president distinguished himself from other Republicans by promising to leave Social Security alone. Over the past four years, hes pretty much done just that.

          There have been no Bush-like privatization plans from the Trump administration, no Simpson/Bowles-inspired murmings over cutting benefits or raising the full retirement age. Theres been no real plan to do much of anything. The Biden campaign ad is as close as theres been to a controversy, and even that misrepresents the presidents aims.

          Should Trump win in November you can expect more of the same.

          I haven’t seen anything discussed on Social Security reform, Andrew Biggs, a research fellow at the conservative-leaning think tank AEI told Forbes Advisor. The president has argued against any Social Security benefit cuts but hasn’t waded into how Social Security’s long-term funding should be secured.

          While this should assuage any fears about changes to the Social Security status quo and soothe soon-to-be retirees worried about cuts to their monthly checks, its less than ideal that the Trump administration has no plans to shore up Social Securitys long-term finances.

          Can I Get A Loan Or An Advance On My Social Security Benefits

          The Social Security Administration pays retirement and disability benefits to those who qualify by contributing to the system through payroll taxes. In addition, the Supplemental Security Income program pays a monthly stipend to disabled individuals who don’t qualify for the Social Security Disability Insurance program. In general, the agency does not pay advances or loans on benefits, but there is a loophole around this rule for retirement beneficiaries, and the SSI program may qualify a pending applicant for an emergency advance payment.

          Recommended Reading: How To Find Out My Current Social Security Benefits

          Can I Borrow Against My Ssi Benefits

          The Supplemental Security Income program is designed to provide financial benefits to those who are disabled and have low incomes. With this program, you receive a monthly benefit from the Social Security Administration. If you decide that you would like access to your benefits early, you cannot borrow against the benefits.

          Did Congress Really Raid Social Security

          Stossel: Free-Market Social Security

          One of the more common theories as to why Social Security is facing a huge long-term cash shortfall is that lawmakers in Congress have pilfered cash from the program and never returned it.

          This idea goes all the way back to 1968, when then-President Lyndon B. Johnson made a change to how the federal budget would be presented. Prior to 1974, before Congress had an independent budgeting process, the President’s Commission on Budget Concepts had three separate budgets, all of which had differing deficits. To simplify things, Johnson called for Social Security and its trust funds to be included in the annual federal budget.

          In 1983, the Reagan administration voted to undo this change and once again remove Social Security from the federal budgeting process. This was done to ensure that changes made to the program are done solely on the merits of the program, and not to balance the federal budget.

          Where the idea comes into play that Congress stole from Social Security is, during this 1968 to 1990 period , it’s believed that lawmakers commingled Social Security’s asset reserves with its General Fund to pay for wars and other line items. The belief among some folks is that Congress has stolen trillions of dollars from Social Security, and that if this money were simply returned to the program, it wouldn’t be in such dire financial shape.

          But the real surprise, upon digging deeper, is that Congress hasn’t stolen a dime from Social Security.

          Read Also: What Is My Social Security Retirement Age

          Policy Basics: Understanding The Social Security Trust Funds

          Few budgetary concepts generate as much unintended confusion and deliberate misinformation as the Social Security trust funds. The trust funds are invested in Treasury securities that are just as sound as all other U.S. government securities, held by investors around the globe and regarded as one of the worlds safest investments. In 2021, Social Security began to draw down trust fund reserves to help pay for benefits. Although Social Security has a long-term financial shortfall that must be closed, the programs combined trust funds will not be depleted until around 2034, which gives policymakers time to develop a carefully crafted financing plan.

          When Do Loans Affect Ssi Benefits

          Under specified circumstances, a loan will affect your SSI benefits. Below are the conditions you should watch out for:

          • You need to spend your loan in the month you borrow it. Otherwise, it will count as a resource in the next month.
          • If you lend someone else money, what they owe you will count as a resource and, thus, affect your SSI benefits. However, the interest you receive will not count as income.

          Don’t Miss: Taking Early Social Security

          More articles

          Popular Articles