You have been thinking about selling the house. Maybe you want to downsize, or move closer to family, or free up some cash. But a question keeps nagging at you: could a home sale put your Social Security at risk?
The short answer is no. For most retirees, selling your home has zero effect on your monthly Social Security check.
Your Retirement Benefits Are Safe
According to the Social Security Administration, eligibility for retirement or survivor benefits comes with no limits on income or assets. Where you live does not affect your check, either.
There is also something called the “earnings test.” The SSA can temporarily reduce benefits for people who claim Social Security before their full retirement age while earning wages above a certain level. But here is the key detail: proceeds from a home sale, or any capital gains, do not count as earnings under that test. So a big sale price does not trigger any reduction.
One thing to keep in mind: the money you make from selling your home could expose more of your benefits to federal or state income taxes. The sale itself will not cost you your check, but it may affect your tax bill for that year.
What About Social Security Disability?
About 8.37 million people collect Social Security Disability Insurance, or SSDI. According to the SSA, that is about 12.3 percent of all Social Security beneficiaries.
A home sale will not affect SSDI, either. Laurence Kotlikoff, professor of economics at Boston University and president of Economic Security Planning, Inc., addressed this directly in the “Ask Larry” forum on the Maximize My Social Security website.
“There is no limit on the amount of cash and assets you can have and still be eligible for Social Security benefits, so if you’re receiving Social Security disability (SSDI) benefits, then you won’t lose those benefits due to selling your home,” Kotlikoff said.
SSI Is a Different Story
There is one type of Social Security benefit where a home sale does matter: Supplemental Security Income, known as SSI. About 4.88 million people collect SSI, and another 2.52 million collect both SSI and regular Social Security.
SSI is different from retirement benefits and SSDI. It is needs-based, reserved for people with very limited income and assets. That means what you own, including cash from a home sale, can affect your eligibility.
According to Disability Attorneys of Michigan, here is how it works if you sell your home while on SSI:
- You have three months to use the proceeds to buy a new home.
- If you do buy a new home and have less than $2,000 left over, you keep your benefits.
- If you end up with more than $2,000, or you do not buy a new home within three months, you will lose SSI eligibility for every month your cash stays above that amount.
- After that, you have 12 months to spend down your assets and apply to have your benefits reinstated.
So if you collect SSI, a home sale requires careful planning. The rules are strict, and the timing matters.
For everyone else collecting regular Social Security retirement benefits or SSDI, you can sell your home with confidence. Your check is not going anywhere.