In September, senators introduced a bipartisan bill, the SSI Savings Penalty Elimination Act, to update Supplemental Security Income’s (SSI’s) asset limit for the first time since the late 1980s. Among safety net programs, SSI has one of the lowest asset limits, meaning in practice, SSI’s asset limit can serve as a ceiling in other programs. The proposed legislation would raise the asset limit from $2,000 to $10,000 for individuals and from $3,000 to $20,000 for married couples.

Asset limits are intended to restrict eligibility for public benefits programs and to target program spending to people most in need. But research shows that asset limits hurt families’ financial security and increase costs for both the government and individuals because of administrative burden, churn, and unintended consequences related to financial insecurity.

A universal asset limit policy that raises the SSI program’s asset limit, simplifies asset rules, and reduces variation across programs could help families achieve greater financial security and reduce administrative costs. Updating SSI asset limits could also support the goals outlined in the Social Security Administration’s equity action plan by simplifying the application process.

Though SSI’s asset limits are often the most restrictive, asset limits are used in many other programs, each with different rules and thresholds that can vary by state, making them difficult for potential recipients and social workers to navigate. As a result, participants may unnecessarily keep assets below established limits. For example, most recipients in one study believed Temporary Assistance for Needy Families asset limits were much lower than the actual limits. And more than half (PDF) of people eligible for but not participating in the Supplemental Nutrition Assistance Program (SNAP) did not think they were eligible for benefits or were unsure of their eligibility.

Restrictive Asset Limits and Complex Program Rules Make It Difficult for Families to Navigate Public Benefits Programs

While increasing the SSI asset limit alone would be a significant step forward, setting a universal asset limit floor—or, requiring all federally funded, means-tested programs to raise asset limits above a specified amount—is an evidence-based solution that would benefit both program participants and the government by encouraging families to save, supporting their financial security, and reducing administrative burden and costs.

Increasing asset limits would support families’ financial security and help them save

Asset limits can discourage saving among families with low incomes (PDF) who are worried about maintaining program eligibility. Research shows that raising or eliminating asset limits can support financial security and upward mobility (PDF). Urban research on SNAP asset limits found that raising or eliminating asset limits led to a 5 percent increase in the percentage of people with a bank account in households with low income and increased the likelihood of people having at least $500 in a bank account.

Research also shows that families with minimal savings (from as little as $250 to $749) are less likely to face eviction, make a late housing or utility payment, or rely on benefits when facing hardship. Higher savings levels are associated with even lower levels of hardship and benefit receipt. Urban research shows savings can be as important as income: families with low incomes who have savings of $2,000 to $4,999 are more financially resilient than families with middle incomes who do not have comparable savings.

A universal asset limit would reduce administrative burdens and government costs

Urban research shows that asset limits lead to administrative burdens for both participants and governments, such as challenging documentation requirements and increased churn (the rate of families moving on and off programs).

Raising or removing asset limits saves administrative time and resources. An analysis by the Center on Budget and Policy Priorities found that an increased asset limit for SSI would reduce churn, improving access for eligible families and reducing costs to the Social Security Administration.

Having families participate in mainstream banking systems also reduces government costs because it enables electronic processing and direct deposits. It costs the Department of the Treasury more than $1 to process paper refunds, compared with only 10 cents to process electronic refunds.

With most recipients participating in multiple programs, universal asset limits could improve access to benefits by minimizing duplicative documentation requirements across multiple programs and confusion over asset limits. A universal asset limit would make it easier to implement a single or common application for key means-tested benefits programs.

In addition, raising the asset limit could reduce overpayments, particularly in the SSI program, which result in administrative costs to agencies, add reporting burdens for participants, and threaten participants’ financial stability.

Reducing financial insecurity could help minimize government costs

Urban research shows that financial insecurity doesn’t just hurt families—it costs governments too. When financially insecure residents (defined as those with less than $2,000 in savings, the current asset limit for an individual receiving SSI) cannot pay property taxes, utility bills, or rent, the cost to city governments can range from tens to hundreds of millions of dollars.

Urban analyses found that after a disruption in income, families without savings were 14 times more likely to be evicted and 3 times more likely to miss a housing or utility payment. The cost of this financial insecurity—measured in eviction and unpaid taxes and bills—is estimated to range from $6 million in Miami to $1.23 billion in New York.

Raising SSI’s asset limit and adopting a universal asset limit could not only improve families’ financial stability and reduce administrative costs but could also contribute to a more effective and efficient social safety net. Understanding how program rules, like asset limits, interact with each other can help us create policies that better support families’ financial security and well-being.