Can You Spend Your SSDI Benefits on Whatever You Want?

 Posted on May 07, 2025 in Social Security Disability

When you receive Social Security Disability Insurance (SSDI) benefits, it is natural to wonder whether there are restrictions on how you can use the money. After all, SSDI is a federal program meant to replace lost income for people who can no longer work due to a qualifying disability. But does that mean the government gets a say in what you spend your benefits on?

The short answer is that you can generally spend SSDI benefits however you see fit, but there are some practical and legal considerations to keep in mind. Understanding these can help protect your financial security and ensure continued eligibility for benefits, and our Collin County, TX SSDI benefit attorneys can help.

Are There Legal Restrictions on SSDI Spending?

Unlike Supplemental Security Income (SSI), which is a need-based program, SSDI is an entitlement program funded through payroll taxes. This means that when you are approved for SSDI, the Social Security Administration (SSA) does not track or limit how you use the money as long as you are not engaging in fraud.

You may spend your SSDI funds on rent or mortgage payments, utilities, food, medical expenses, education, or anything else. The money is considered yours, and you are under no obligation to account for your purchases to the SSA. However, misuse that involves criminal activity can still get you into trouble.

Does Your Spending Affect Your SSDI Eligibility?

In most cases, how you spend your SSDI benefits will not affect your eligibility. SSDI is not based on your current financial status but on your work history and disability status. This is different from SSI, where income and asset limits do play a role.

That said, there are situations in which spending behavior could raise red flags:

• If you suddenly appear to have more income than reported, the SSA may investigate.

• If you are receiving other types of public benefits, such as subsidized housing or Medicaid, those programs may have their own rules about how assets and income are calculated.

• If you return to work or earn outside income above certain thresholds, you may become ineligible.

Do I Have to Use SSDI Back Pay For Certain Things?

Many SSDI recipients receive a lump sum of back pay once they are approved. This back pay may cover months or even years of retroactive benefits owed by the SSA. There are no special restrictions on how you use this money, but since it is often a large sum, it is wise to plan carefully.

The SSA does not require you to report how you use your back pay, but large financial moves may lead to unwanted scrutiny if other benefit programs are involved.

Can You Save or Invest Your SSDI Benefits?

You are allowed to save SSDI money or use it for investments. There is no asset limit for SSDI as there is with SSI. Passive income like interest or dividends usually does not impact your SSDI as long as you are not actively working to earn it.

What Happens If You Misuse SSDI Funds?

While SSDI recipients have broad freedom to use their benefits, the SSA takes fraud seriously. Misuse includes:

• Lying about your disability to continue receiving benefits

• Hiding income from the SSA

• Allowing someone else to use your benefits improperly

• Failing to report a return to work or income changes

If the SSA determines you have misused funds, you could lose your benefits, be required to repay money, or face criminal charges. To avoid problems, always keep the SSA informed of major changes in your life and seek legal guidance if you are unsure about your rights or responsibilities.

Contact a Plano, TX Social Security Disability Insurance Lawyer

If you have questions about how to protect your SSDI benefits or need help responding to an SSA investigation, contact a Collin County, TX Social Security Disability Insurance attorney at The Law Offices of Coats & Todd. With over 60 years of combined legal experience, our attorneys understand how life-changing SSDI benefits can be, and how important it is to use them wisely. Call 972-671-9922 to schedule your free consultation today.