Web Exclusive: Personal Finance Q&A with Michael Morris
In Investing in the Future, Quest explores the idea that financial planning can be complicated, and that it pays to do your research and learn about your options. To help build upon the information provided in Investing in the Future, Michael Morris, a recognized field leader on financial capability for people with disabilities, provides some answers to commonly asked questions related to the topic of personal finance. Morris is the executive director of the National Disability Institute (NDI), and serves as adviser and technical expert to multiple federal agencies on policy and system relationships at federal, state and local levels to advance economic stability, mobility and asset development for people with disabilities.
Q: The importance of increasing financial opportunity and stability for people with disabilities is garnering a lot of attention right now. Why do think this is the case?
A: Twenty five years after signing into law the Americans with Disabilities Act (ADA), there is a greater expectation than ever before that individuals with disabilities become a part of the economic mainstream and follow a path to a better economic future.
In a report published by National Disability Institute in 2015, we were able to document the banking status and financial behaviors of people with disabilities. The report revealed for the first time that almost one in two working-age adults with disabilities are unbanked or underbanked and were likely to use alternative financial services. The data also indicated that adults with disabilities are twice as likely to be living in poverty than their peers without disabilities and more than three times as likely to be unemployed or underemployed. These statistics have put a spotlight on the challenges of financial instability that are being faced by too many Americans with disabilities nationwide.
Government, financial institutions, and the business and disability communities are designing and implementing new strategies to advance economic empowerment and financial stability for people with disabilities. With the passage of the Workforce Innovation and Opportunity Act (WIOA) and the Achieving A Better Life Experience Act (ABLE), we are going to see in 2016 new opportunities for people with disabilities to identify career pathways and begin to set savings goals that will become the focus of contributions to ABLE accounts to improve economic, social and community participation with more choices than ever before.
Q: What do you see as the biggest barriers facing people with disabilities from becoming financially stable?
A: All of our federal laws are not aligned to encourage people with disabilities to work, save, build assets and become a part of the economic mainstream. Public benefits like Social Security, Medicaid, and housing and food assistance limit eligible individuals' ability to save and acquire assets. The safety net of these public benefits provide a basic quality of life. However, eligibility requirements are the equivalent to a lifetime sentence of poverty. Too often many individuals with disabilities have to overcome myths and misinformation about their ability to work and be fully included in community life. Every day, youth and adults with disabilities are gaining access to work experience and jobs, which are dispelling these myths and changing expectations for employers, co-workers and individuals with disabilities.
Q: What are some of the key tools that individuals can use to improve their financial outcomes?
A: National Disability Institute has worked with community partners nationwide to educate individuals with disabilities about favorable tax provisions like the Earned Income Tax Credit (EITC). Over the past 10 years, NDI has helped low-income tax payers with disabilities utilize the EITC and receive over $2 billion in tax refunds. For many individuals on Social Security benefits, there are a variety of work incentives that enable an individual with a disability to set goals that will advance his/her self-sufficiency.
As states open ABLE programs across the country, the opening of an ABLE account will become a down payment on freedom for many individuals with disabilities and their families. An ABLE account is a tax-advantaged savings account that cannot reduce or eliminate eligibility for any kind of federal benefit. The funds in the account can be used to cover a diverse set of expenses, as varied as costs related to education, transportation, housing, technology and health care. To learn more about ABLE accounts, please visit ABLENRC.org.
Q: For many of our families, navigating public supports and private institutions can be complicated. How can financial institutions better support people with disabilities?
A: Many financial institutions have created resources to educate people with and without disabilities about money management and financial decision-making. A growing number of financial institutions are developing mobile banking options that may also bring more individuals with disabilities into the financial mainstream by offering new affordable and accessible products and services. National Disability Institute and Spring Bank are beginning a collaboration this month to offer reasonably priced consumer loans for the purchase of assistive technology (AT), which may not be available through other more traditional consumer lending products. AT loan programs exist in more than 30 states and are often cooperative efforts between a nonprofit in the disability community and a financial institution.
Q: The passing of the ABLE Act was the result of impressive efforts from families, advocates and policymakers. What are some of the upcoming policy issues individuals should know about?
A: The next stage of development of the ABLE Act considers possible expanded coverage and increasing the level of annual contributions. To be eligible for an ABLE account, the age of onset of a disability must be 26 or younger. Pending legislation will increase the age of onset to age 46 for an individual to be eligible for an ABLE account.
There is another draft bill that would raise the annual contributions limit from $14,000 to more than $20,000, if the contribution is made from earned income of the individual with a disability, as an additional incentive to work and save. Another policy issue that is emerging in the presidential debates and before Congress is a serious discussion about how to reduce poverty in America. NDI has set forward the bold goal of reducing poverty by 50 percent in the next 10 years for people with disabilities and increasing financial inclusion by 50 percent during the same time period.
There is no single policy strategy that will achieve these objectives. NDI encourages everyone to be a part of the dialogue to identify changes in our tax laws and to create incentives to saving and asset-building. Our Social Security laws need to be modernized to recognize that people with disabilities should not have to prove an inability to work but instead be encouraged to work and still receive a basic level of public benefits to help them with the extra costs of living every day with a disability. People with disabilities want a hand up, not a handout. This political year must focus attention on how public policy can advance financial stability and economic mobility for people with disabilities.
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