Does Winning the Lottery Affect Your Social Security Disability Benefits?

No, lottery winnings do not affect your social security disability benefits (SSDI). But it can reduce or totally cut your Supplemental Security Income (SSI).

That’s because SSDI is an earned benefit. You got it because you paid social security taxes and have proven that you are disabled. SSI, on the other hand, is a needs-based benefit. It’s paid to disabled individuals who have limited income and resources, and haven’t paid enough social security taxes.

As such, non-work related earnings like lottery winnings do not count as income under SSDI. While an SSI recipient’s financial capacity will obviously be improved if they win the lottery. This means they are not anymore in need of aid from the government.

If you’re receiving SSI, your benefits may stop temporarily. But it can resume again once your resources have fallen below the SSA’s income limit.

What Counts as Income Under SSDI?

SSDI benefits are given on the assumption that your disability prevents you from working. If you get back to work and are earning more than the SSA’s limit, you are considered to be engaged in a Substantial Gainful Activity (SGA). When this happens, your SSDI benefits will stop.

This is why if you’re receiving SSDI benefits, the SSA won’t care about your unearned assets. It only takes into account income earned from working which includes:

  • wages
  • honorarium
  • earnings from self-employment
  • workers compensation
  • other government benefits
  • pensions from private insurance providers

Unearned income such as gambling winnings, dividends, interests, and spousal income is not counted as SSDI income.

A man who won the lottery.

How Is SSI Income Calculated?

For SSI purposes, the SSA defines income as:

anything you receive during a calendar month and can use to meet your needs for food or shelter. It may be in cash or in kind.

This explains why lottery winnings are considered income if you are receiving SSI. You can use it to buy food, pay for rent, and any other necessities.

But not all earnings count as income under SSI. The SSA only takes into account the “countable income”. This is the leftover earnings after weeding out non-income items and applying the appropriate exclusions.

How About Your Retirement Benefits?

Just like SSDI, social security retirement benefits are earned benefits. As such, winning the lottery will have no impact on your retirement benefits.

Should I Report My Winnings?

Yes, you should. It doesn’t matter if you’re receiving SSI, SSDI, or retirement benefits.

Lottery winnings are reported to the IRS and, in turn, will be seen by the SSA. If you do not report and explain the source of this income, it might get you into trouble with the SSA. Worse, they may count it as part of your earnings for the month.

If you’re receiving SSI, then that’s all the more reason to report your lottery winnings. When the IRS informs the SSA of your lottery earnings, you may get charged with overpayment. As such, you will have to return all the SSI payments you received during the time you are not eligible for SSI.

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Judy Ponio is a writer for Victor Malca LawAbout The Author

Judy Ponio is a writer for Victor Malca Law P.A. and enjoys helping people with questions about social security, workers compensation, and other serious matters involving people’s livelihood. She is not an attorney and her writing should not be considered legal advice.

Comments (5)

My friend won some money on a scratch ticket and used most of it to fix up her house, she has kept all her receipts for all she bought and it took up alot of her winnings. She receives SSDI & SSI, they stopped her SSI and she is kind of struggling, I was under the impression that they only stopped your payments until they think she has had enough time to spend the money, was I given the wrong information??

I am a 74 yo retired woman with 1200.00 social security check monthly. Lasy year i won ( very very unusual, never before) won 177,000 gambling. I just recieved a letter from SSA that they were reducing by benefits 500.00 per month and also taking all of my husbands 300.00 each month as well…leaving us very short … is this true, can they do this?

I won a thousand dollers on a lottery ticket but by the time I pay for taxes it be like eight hundred I receive SSI sdi will they stop my benefits or reduce it my friend so called it said that we can have up to two thousand dollers that they won’t stop your SSI he’s never won so how would he know

Hey do you know if ssdi would take my lottery winnings when I go to get the winnings because they over paid me and i did make agreement with them and i am paying back 10 dollars a month

I had an overpayment on my social security disability i have made agreement and am paying back 10 dollars a month can they take my lottery winnings its only 800

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