Social Security disability often comes with a substantial amount of "back pay," or retroactive benefits in a lump sum. This is the money Social Security owes you while you waited to get your case approved. One of our recent clients received over $50,000 in back pay and another received about $90,000.
How can you spend your back pay? Are there any restrictions?
The answer is no. There are no restrictions on how you can spend your own back pay in an SSDI claim. It is your money and Social Security places no restrictions on how you spend it.
If I were disabled and got a one-time lump sum payment, I would think about my future needs. High among my priorities would be a decent place to live. Many disability claimants struggle to pay rent or mortgages, and some have been homeless before getting their benefits.
Buying a small house that you can pay for is usually a good investment that you won't regret. It guarantees you a place to live as you get older.
However, Social Security places no restrictions on how you can spend your own SSDI checks, including back pay. You don't have to answer to them. Simply put your own needs first.
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This post does not address the responsibility of representative payees who are responsible for helping another person use their Social Security benefits. Since a payee is not spending his or her own money, there are some requirements on how the money is spent.
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