Elderly couple's lottery win: Learn from their costly mistake!
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Imagine the thrill of winning the lottery – a dream come true for many, offering financial freedom and the chance to live out golden years in comfort.
However, for one Australian couple, their lottery win came with an unexpected twist: the loss of their age pension.
The couple, aged 73 and 67, found themselves in a unique predicament after winning a substantial $1,000,000.
They wrote to finance expert Noel Whittaker, who writes a column in the Sydney Morning Herald, to share their story and seek advice.
Upon receiving their winnings, which they sensibly placed in a high-interest savings account, they were surprised to discover that their full-aged pension payments had ceased.
A couple who won the lottery and subsequently lost their aged pension questioned whether there had been a way to prevent the loss. Credit: Shutterstock
They planned to use the money to purchase a new house, allowing them to sell or renovate their home.
'The windfall has stopped our pension completely until we spend the money, which is all good and well. But could we have prevented the pension loss in any way?' they asked.
Whittaker's response was straightforward: consider yourselves lucky and enjoy the money.
The age pension in Australia is a safety net for older Australians who meet specific criteria, including residency rules, income and assets tests, and an age requirement.
To qualify, you should have been an Australian resident for at least ten years, with at least five years being continuous. The age requirement is currently set at 67 years.
The maximum rate for the aged pension is $1,020.60 for singles and $1,538.60 for couples per fortnight, with additional supplements available for utility and medicine-related costs.
However, the amount you receive is subject to income and assets tests. Income can come from various sources, including wages, real estate, investments, and superannuation.
Assets encompass various items, from financial investments to personal belongings like cars and even gifts.
For a full pension, the assets cut-off point is $314,000 for homeowner singles and $470,000 for homeowner couples.
Non-homeowners have higher thresholds. If you have more than these amounts, you may still be eligible for a part pension, with cut-off points at $1,283,000 for non-homeowner couples.
As the couple discovered, lottery winnings are considered assets and can affect pension eligibility.
If your total assets exceed the thresholds, your pension payments may be reduced or stopped until your assets fall below the cut-off points.
Many are concerned that the age pension will ever cease in Australia. With an aging population, some worry that the pension system may become unsustainable.
However, the age pension has strong bipartisan support, and as former Prime Minister Bob Hawke stated in 1989, 'The pension will always be there for those who need it.'
Superannuation, introduced in the late 1980s and made compulsory in 1992, was designed to alleviate pressure on the welfare system and improve retirees' living standards, not to replace the age pension.
Similarly, a pensioner won $60,000 in the lottery but advised fellow pensioners about its potential impact on their pension.
He received a 'rude awakening' when Centrelink considered his monthly lottery payments as income, leading to the suspension of his pension and related benefits. Learn more about this story here.
Have you ever considered how a lottery win might affect your pension? Share your thoughts and experiences in the comments below.
However, for one Australian couple, their lottery win came with an unexpected twist: the loss of their age pension.
The couple, aged 73 and 67, found themselves in a unique predicament after winning a substantial $1,000,000.
They wrote to finance expert Noel Whittaker, who writes a column in the Sydney Morning Herald, to share their story and seek advice.
Upon receiving their winnings, which they sensibly placed in a high-interest savings account, they were surprised to discover that their full-aged pension payments had ceased.
A couple who won the lottery and subsequently lost their aged pension questioned whether there had been a way to prevent the loss. Credit: Shutterstock
They planned to use the money to purchase a new house, allowing them to sell or renovate their home.
'The windfall has stopped our pension completely until we spend the money, which is all good and well. But could we have prevented the pension loss in any way?' they asked.
Whittaker's response was straightforward: consider yourselves lucky and enjoy the money.
The age pension in Australia is a safety net for older Australians who meet specific criteria, including residency rules, income and assets tests, and an age requirement.
To qualify, you should have been an Australian resident for at least ten years, with at least five years being continuous. The age requirement is currently set at 67 years.
The maximum rate for the aged pension is $1,020.60 for singles and $1,538.60 for couples per fortnight, with additional supplements available for utility and medicine-related costs.
However, the amount you receive is subject to income and assets tests. Income can come from various sources, including wages, real estate, investments, and superannuation.
Assets encompass various items, from financial investments to personal belongings like cars and even gifts.
For a full pension, the assets cut-off point is $314,000 for homeowner singles and $470,000 for homeowner couples.
Non-homeowners have higher thresholds. If you have more than these amounts, you may still be eligible for a part pension, with cut-off points at $1,283,000 for non-homeowner couples.
As the couple discovered, lottery winnings are considered assets and can affect pension eligibility.
If your total assets exceed the thresholds, your pension payments may be reduced or stopped until your assets fall below the cut-off points.
Many are concerned that the age pension will ever cease in Australia. With an aging population, some worry that the pension system may become unsustainable.
However, the age pension has strong bipartisan support, and as former Prime Minister Bob Hawke stated in 1989, 'The pension will always be there for those who need it.'
Superannuation, introduced in the late 1980s and made compulsory in 1992, was designed to alleviate pressure on the welfare system and improve retirees' living standards, not to replace the age pension.
Similarly, a pensioner won $60,000 in the lottery but advised fellow pensioners about its potential impact on their pension.
He received a 'rude awakening' when Centrelink considered his monthly lottery payments as income, leading to the suspension of his pension and related benefits. Learn more about this story here.
