How can people on government assistance save for retirement?

“Where are the best places for people on state assistance to start saving for retirement? I’m looking for something with low starting balances and low monthly transfers to the account. Do you recommend any financial companies, savings accounts, government-issue bonds, stock market?? I am so confused!”

Submitted by Jessica L.

I want to acknowledge your foresight in thinking about retirement savings. One of the challenges you are facing is the “asset means test,” which can be a barrier to receiving public benefits if you have savings that exceed the eligibility threshold.

Start with Small Savings

Your first instinct is right on. Begin saving small amounts in an account that is liquid in case you have a financial emergency. I call this a “save/don’t spend” account. If you are on state assistance, investing in the stock market may be more of a risk than is appropriate. I suggest first making sure that your daily living expenses and emergency savings are fully covered.

Some states are building “Secure Choice” retirement accounts specifically for low- and moderate-income residents. The Pew Charitable Trusts offers a deeper dive into this topic.

Steps For Building Savings

So what now? Here are a few things to keep in mind:

  • Focus on your current financial situation. Make sure you have a budget that is working for you and you are able to stick to it consistently. Identify any money available for savings.
  • Save small amounts every month in an account that is accessible. You can use this money as your emergency fund and it can become the “base” of your retirement fund. Make sure you stay under the eligibility threshold as long as the state assistance is necessary for your financial stability.
  • Remember that any assets that are held in your name are subject to review by the state. Some assets are excluded and will not impact your benefits. Cash savings and investments are often subject to the asset limits.
  • Stay on top of local efforts to remove asset limits or state retirement programs.
  • Contact a financial coach or counselor if you need additional help.

Learn Your Local Eligibility Rules

The savings limits vary from state to state. Check your local community to make sure you’re following the eligibility guidelines. There are efforts around the country to remove this savings barrier for people who are attempting to build financial security. However, the reality is that you should be thoughtful about saving if you need the benefits for your current living expenses.


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