Factors Related to the Banking Status of Supplemental Security Income Recipients: Findings from the National Financial Capability of Adults with Disabilities Study

Background/Purpose: Asset-based social policies promoting savings and asset accumulation, in combination with income transfers, have proven to a be promising tool in the alleviation of poverty. Asset accumulation allows individuals with low incomes to save money toward goals like home ownership, secondary education, and starting small businesses.

Welfare policy for individuals with disabilities has mirrored conventional welfare policy in that it has utilized income transfer programs as mechanisms for providing a safety net. Programs like Supplemental Security Income (SSI) afford a guaranteed basic income for individuals with disabilities. These programs, like their mainstream income transfer counterparts (e.g., Temporary Assistance for Needy Families), are means-tested, which means they have traditionally incorporated stiff penalties for any type of formal asset accumulation.

Recent policy shifts in Congress have paved the way for SSI recipients to build assets to supplement means-tested programs. One critical indicator of successful asset accumulation is the utilization of mainstream financial services, such as checking and savings accounts. Research shows, however, that SSI recipients are an historically economically excluded population in banking, with 46.5% of working-age adults with disabilities remaining un-banked or under-banked. Compared to the banking statuses of households without SSI recipients, one in five typical households remained under-banked. This study sought to discover whether there was an interaction between financial education, gender, age, and ethnicity on banking status among Supplemental Security Income recipients.

While this study adds to more expansive efforts in asset-based research, specific contributions to the field includes the application of accumulation theory on a new population—individuals with disabilities who participate in income transfer programs—whose savings actions, accumulation habits, and financial literacy have been previously unexamined.

Methods: Data and samples: The 2012 National Financial Capability of Adults with Disabilities Study from the FINRA Investor Education Foundation was used for this study. The sample includes 10,130 adult SSI recipients and 10,520 adults who are not disabled and are not recipients of SSI. Data collection: Data were collected for the 2012 NFCS Study using a state-by-state survey administered online to 20,650 American adults. Data were collected from July to October 2012 and were weighted to be representative of the national population (based on census data) on the following demographic variables: age, gender, ethnicity, and education. Statistical approach: An binomial logistic regression was performed to ascertain the effects of financial education, age, gender, and ethnicity on the likelihood that participants are banked or un-banked.

Results: The logistic regression model was statistically significant. Of the four predictor variables only three were statistically significant: age, ethnicity and financial education. Gender was not a significant predictor of banking status.  

Conclusions and Implications: Findings suggest that there is a positive interaction between financial education, age, and ethnicity on banking status of SSI recipients. Results from this study could help to target financial education to SSI recipients in order to increase participation in mainstream financial institutions. These results add to the existing body of asset-based social policy literature and provide an under-girding for continued research into poverty and asset-accumulation among SSI recipients.