All the stories of miserable lottery winners popping up when the jackpot gets larger serve an important purpose for a tiny portion of the population: You just won the lottery. Here is what not to do. Here are the changes you may have to make in your life.
I mean, thanks to reading all these stories, I know that showing up with my own face and name for promotion is a bad idea. That I should try to hire some anonymous-looking financial experts to do it for me, and to help me navigate the world of financial options that I can afford to think about now. And that unless I want to hugely change my relationship to everyone I know, I need to keep quiet about this. The first thing I’d do if I won the lottery is to binge on these stories and take a bunch of notes.
There was a partner at a BigLaw firm where I used to work – he was probably making $1.4-$1.6MM/year – who won the lottery. I think he cleared about $15MM - lump sum, after taxes. He just bought a house in Pacific Heights in cash and went back to work.
I remember seeing a news article in the 80s of a local bartender who’d won big enough in the lottery a year earlier that he could’ve retired for life. He was back at his old job. When asked about it, he said “I blew it all on a year of amazing partying. Like the time I chartered a jet and flew my friends to Jamaica for a weekend, then as a joke flew the jet back without them. I sent another one to pick them up a couple hours later. It was a blast, I had the best year of my life, and if I won again tomorrow I’d do the same thing.”
Not sure I’d do it that way, but I sure can’t argue with it.
Being rich involves a whole new set of skills and support structure. Anyone with the sense God gave a cactus knows that if you suddenly need those skills, you take some time to sit back and learn them.
Most of the rich folks really just stay that way by hiring the right people and listening to good advice.
Edit: … and by owning enough of everyone else’s contributions that they have safe capital to not touch.
Sure, there’s a part of the “poor and middle-class people are too dumb to know how to be rich”, but there really is a whole infrastructure and toolset involved in managing that much wealth, which until you need it, you’d never even know existed.
Sure, if you think about it you could say “you need a good estate lawyer, you need good accountants or money managers, you need to stay anonymous”, but if you grew up poor, how would you know how to do any of that? Like, if you discovered a Great-Aunt had left you a large inheritance right now, would you know where to find a money-manager to help you deal with it? Would you be able to tell if they were trustworthy or just out to rob you blind? Would you be able to tell if they were robbing you blind?
This is a whole bunch of stuff that someone who grew up in circles of the 0.1% would know, and if not then they’d know who to ask. For someone who grew up in the 80% at the other end of the distribution, that’s a steep learning curve to find answers to questions you probably didn’t even know existed.
I buy tickets in the state lottery (which rarely pays off over 10 million). Like the say, “for entertainment purposes only.” I like playing money manager, figuring out taxes on annuities vs lump sum.
On the astronomically small chance I won, I’d divide it up between myself and my siblings. Take the annuity to bolster my retirement finances, move out of state and hopefully off the radar.
Heh. Again, a problem I’d never realistically have, but if I did win the state lottery, if possible I’d wait for a big payoff in PowerBall or whatever to be announced, and turn in the ticket then.
None of us have any idea what the difference between winning $50 million and $500 million is. I’m sure that there IS one, and I’m sure that if you won the big jackpot, you’d figure it out eventually.
I was visiting family a few years back when there was a large jackpot, I thin the lump sum would have been $250 million after taxes. As people tossed out what they’d do, I floated the idea of giving it all away except for say $50 million. Nobody seemed to like the idea.
But that amount would allow you to spend $1 million a year for 50 years. And that’s ignoring interest. I know what I would do withe the first couple of million, but after that who knows.
And that’s the shame of it, because my idealistic heart wishes that huge multi-million dollar lottery winners would use the windfall to fund things like education, medical research, clean water, renewable energy, paying off other people’s loans, planting trees, etc. Acts like that would surely make the news.
Of course, I realize that if I ever won such a sum, I’d have to put my money where my idealistic heart is, which might be tough.
All depends on the person and their backgrounds… what they’re made of, their possible addictions and personality flaws.
Neighbors of my grandparents won $3M on the 6/49 and soon enough were spending like there was no tomorrow. Before they lived in a dilapidated converted chicken coop/barn - how that was legit who knows. This thing was on the side of a hill with a gorgeous view. All they did was upgrade the windows to triple pane (same old newspaper wall insulation). It wasn’t an easy existence before, and they did very little to improve that.
Oh, but the booze and parties flowed. All their friends got pickups and boats and loans, while the house kept sliding down that hill. Less than a year after winning, they blew through all the money not keeping enough for their own needs. Eventually the municipality condemned the coop and they had to go to the bank to borrow off the value of the land so they could buy a shitty RV to park there.
The drinking killing the husband, the wife died a few months later when the RV ran out of propane and she froze to death. Bank got the property which was turned into luxury cottage lots.
Yeah, seems to me this is one of those “first have to have won the money to know what troubles it’s caused” problems. In other words, you can’t just fantasise about it, you have to win the money before it’s possible to say ‘with hindsight, I wish that never happened’. As others have mentioned, I imagine it’s actually very few people who experience this.
A lot of those rules are set by financial institutions that benefit from encouraging people to aim way too high, though. Personally, I wouldn’t need $1 million to retire forever. That’s because my goal isn’t to leave anything, and my expenses decreased a lot in the last five years.
Spending the last dime on your last day so you have nothing to leave at the end requires quite a bit of precision on that last day.
Even just getting close is difficult. Overshoot with extra savings, and you’ll leave something behind. Undershoot and out live it, and now you’ve got real problems.
