The vast majority, or around 90 per cent, of working-age people with disabilities, are not financially healthy; reveals new research from the Financial Health Network, the US-based authority on financial health.
In a new report, ‘The Financial Health of People With Disabilities‘, the Network also reveals that around one-third of all working-age people with disabilities are currently characterised as ‘financially vulnerable’.
Financially vulnerable individuals typically struggle to meet expenses, have little to no emergency savings, and have burdensome levels of debt.
The research also finds that 93 per cent of people with disabilities are unfamiliar with ABLE Accounts, the primary tax-advantaged asset-building tool available to people with disabilities. As a result, these accounts, which enable eligible disabled individuals to accumulate assets without losing public benefits, remain rarely used and poorly understood.
Overall, just 10 per cent of working-age people with disabilities are currently ‘financially healthy’, compared to 30 per cent of working-age people without disabilities. Meanwhile, almost half of all working-age people with disabilities have annual household incomes under $30,000, compared to just 21 per cent of working-age non-disabled people.
Barriers to financial inclusion
The report leverages qualitative interviews and new survey data collected this year solely from people with disabilities coupled with 2022 Financial Health Pulse survey data. Financial Health Network’s findings reveal an obvious and large disparity in financial health between people with and without a disability.
Credit health emerged as a key factor behind people with disabilities having to use alternative credit services like payday loans, pawn, title loans, and refund anticipation loans. Around 55 per cent of disabled survey respondents who used an alternative credit service said they did so because their “credit score was too low to get a loan at a bank”.
People with disabilities reported worse credit scores than those without disabilities at all income levels, suggesting they face distinct barriers to affordable credit.
Jennifer Tescher, founder and CEO of the Financial Health Network, said: “Thirty-three years have passed since the Americans with Disabilities Act, yet it is an unfortunate reality that financial health remains inaccessible to so many people in America.
“This study represents both a first-of-its-kind deep dive into the financial health challenges faced by the disability community and a wake-up call to business leaders, financial services organisations, and policymakers that we’re not doing enough.”
With this in mind, it is clear there are a number of opportunities to improve inclusivity in employment, better financial services and public benefit design, and improve credit access and asset-building opportunities – which could make financial health more accessible for all.
The majority fail to utilise ABLE accounts
One potential solution that could positively impact the financial health of people with disabilities is the ABLE account. SSI and Medicaid impose asset limits on their beneficiaries, but ABLE accounts enable eligible individuals to accumulate assets without losing these benefits.
In our survey of individuals with disabilities, less than one per cent had an ABLE account, and all of them had less than $10,000 in their accounts. In addition to low account ownership, the report reveals a significant lack of awareness or knowledge about ABLE accounts among the disability community: 93 per cent of survey respondents said they were unfamiliar with ABLE accounts.
Andrew Warren, research lead and senior associate of policy and research at the Financial Health Network, said: “There are over 40 million people with disabilities in the United States. Despite the ubiquity and diversity of the disability community, they are still so often marginalised. Our data show that the structural barriers people with disabilities face in earning income, saving, and borrowing have profound implications for their financial health.”
