Lotto Winner FIRE Message

travelover said:
I'm only bitter because the government won't let me run my own lottery. :LOL:
Click to expand...

They hate competition, that's for sure. Way before it started up here, they outlawed the much maligned video poker machines, to make sure there was no other outlet for the hapless millions.
 
Dawg52 said:
I wouldn't mind seeing if I could be one of the few successful ones. :)
Click to expand...
If you win, be sure to PM me your phone number, old buddy, old pal. :LOL:
 
Reading that guy's response to his boss made my day.

Normally I detest reading about lottery winners. Mostly because of severe envy on my part :)

But also because I get sick of so many of them saying stuff like, "Oh, I'm not going to let it change me! I'm going to keep my job!"

THEN WHY DID YOU PLAY:confused:

I want to read more about the people who tell their boss, "I won the lottery. Take your job and shove it!" kind of like this guy did.

Hopefully, he'll be smart about the winnings and not do stupid stuff with it. But at least he wasn't one of those saccharine-sweet people who say it's not going to change them, and they're going to keep their jobs.
 
travelover said:
Please post a follow up in 5 years. :cool:

Riches to rags: Why most lottery winners end up broke - Yahoo Finance Canada
Click to expand...

From your link,
Why big winners end up broke
But let’s say you beat the odds; you avoid death by lightning and win a big jackpot! It could happen. It happened to a 35-year-old resident of Hamilton, nine years ago. After scraping by on low-paying jobs and welfare, she cashed in a winning ticket for more than $10 million. But after travel and cars and other purchases ate up her fortune, she’s right back to where she started - becoming just one of many big lottery winners who went from rags to riches and back again.

How could this happen? How could someone used to living on so much less spend all that money?

A million-dollar lesson
Think back to that big bowl of candy. The bigger the bowl, the more you eat. The same is true for money. The bigger the sum, the more indiscriminately you’re likely to spend it, believing that if the pile is deep enough, you’ll never have to worry about hitting the bottom. It’s the same fantasy for those who struggle financially and come up short every month.

Whether you have an extra $10,000 or $10 million, the lesson is the same: If you dive in indiscriminately, it won’t be long before you’re scraping the bottom of the bowl. And whether you’re rich or poor, that’s one lesson worth at least a million bucks.
Click to expand...
So, essentially the reason why people go broke after winning the lottery, is that they spend too much no matter how much they have.

In other words, a certain percentage of people are doomed to be broke, no matter what fate brings them. Wow, that's so depressing. Probably true, though. :(
 
travelover said:
Please post a follow up in 5 years. :cool:

Riches to rags: Why most lottery winners end up broke - Yahoo Finance Canada
Click to expand...

Not all of them of course. A local retired sheriff around here won ~$30 million and has done well (donated a lot to local charities) and another family DW is slightly acquainted with kept their self control.

We'd look at what is a sustainable withdrawal rate. I suspect most members of this board would do likewise. Even then we'd have a hard time deciding how to spend an additional say $500k a year. But I'd like to have a go at it.:)
 
Walt34 said:
Not all of them of course. .......
Click to expand...
Right, there was a neat story in our local paper about a tiny restaurant here in MI where the employee lottery pool won and the people did really responsible things like going back to school and paying off credit card debts. I don't recall the numbers - it was significant but not double or triple digit millions.
 
A study on how people do after winning the lottery would be most interesting. Of course we read about those who spend all their money, and some even end up dead.

I would think the majority of winners would be responsible.

Just applying the 4% SWR would allow the money to last more than a lifetime.
 
When my mom died a few years ago we kids had to sell her house and we ended up selling to a local lottery-winning family who bought the place for their adult daughter. From what I understand, they're being fairly responsible and remain well-to-do. (I should state that it's my sister who's kept in touch with the daughter. I haven't had anything to do with anyone.)

I remain firmly in favor of lottery winners, under the circumstances.
 
mikefixac said:
........I would think the majority of winners would be responsible............
Click to expand...
I'd think that the average lottery player is not the same as the average American and certainly not like the average ER forum participant.

Don McNay, author of the book "Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery," says nine out of 10 winners go through their money in five years or less.
Click to expand...
Powerball: What to do if you won - CBS News
 
There's a big, fancy stone mansion a few miles from us, which was built about 20 years ago by a couple who won $20 million. Trouble is, it was $1M per year for 20 years, meaning "only" about $600K/year after taxes. They spent everything they could get their hands on to build this magnificent spread, and somehow forgot that a mansion needs $$ for taxes, insurance, upkeep - and staff. They ended up selling it for less than they paid, since this was not yet a mansion area and buyers were scarce. I felt sorry for them - they could have lived so well on that $600K, but they wanted the idea of a mansion and couldn't handle the reality.

Amethyst
 
Don't lotteries pay an annuity? It's probably up to each organization, but I know in Florida a while back the default option was an annuity, but you could take the NPV of the cash flows. If you're 95, the lump sum sounds like a good deal, hehe.
 
sengsational said:
Don't lotteries pay an annuity? It's probably up to each organization, but I know in Florida a while back the default option was an annuity, but you could take the NPV of the cash flows. If you're 95, the lump sum sounds like a good deal, hehe.
Click to expand...
Generally, you get a choice between a lump sum or a yearly payout. Most seem to want the lump sum.
 
LoneAspen said:
Reading that guy's response to his boss made my day.

Normally I detest reading about lottery winners. Mostly because of severe envy on my part :)

But also because I get sick of so many of them saying stuff like, "Oh, I'm not going to let it change me! I'm going to keep my job!"

THEN WHY DID YOU PLAY:confused:

I want to read more about the people who tell their boss, "I won the lottery. Take your job and shove it!" kind of like this guy did.

Hopefully, he'll be smart about the winnings and not do stupid stuff with it. But at least he wasn't one of those saccharine-sweet people who say it's not going to change them, and they're going to keep their jobs.
Click to expand...

I completely agree. One of my favorite statistic that I quote (it may even be true ;) ) Is percentage of lottery winners who say they will keep their jobs 75%, percentage who quit one year 75%.

The thing that amazes me is why do almost all the lotto winners take the lump sum? I've never done that math and maybe the interest rate they offer on the annuities is awful. But if you won $20 million, $1 million a year should be plenty for anyone and if you screw up and spend it all in the first couple of year hopefully by year 5 or so you'll get a clue about being rich.

So when we are talking $300 million or $15 million a year why you would elect to the $100+ million lump sum (and pay all the taxes up front) is incomprehensible to me.
 
travelover said:
I'd think that the average lottery player is not the same as the average American and certainly not like the average ER forum participant.

Powerball: What to do if you won - CBS News
Click to expand...
I don't believe that 9 out of 10 number, but I don't really know. Just like articles about people blowing through the money are more popular than the ones about people who manage it well, I wonder if this number was contrived to sell his book.
 
clifp said:
The thing that amazes me is why do almost all the lotto winners take the lump sum? I've never done that math and maybe the interest rate they offer on the annuities is awful. But if you won $20 million, $1 million a year should be plenty for anyone and if you screw up and spend it all in the first couple of year hopefully by year 5 or so you'll get a clue about being rich.

So when we are talking $300 million or $15 million a year why you would elect to the $100+ million lump sum (and pay all the taxes up front) is incomprehensible to me.
Click to expand...
Those aren't the numbers though. Even with higher interest rates I think you got at least half the money in a lump sum (unless by 100+ you really mean 150 or so). With much lower interest rates it's a lot more. Mega Millions Lottery Jackpot: Should You Take the Lump Sum or Annuity? - ABC News says that a $500M jackpot less than 2 years ago would pay $359M lump sum--both amounts before taxes. Spreading the amount over multiple years doesn't help that much with taxes since nearly all of it will be in the top bracket each year anyway. That article says it's a no-brainer to take the lump sum from a financial standpoint. You could argue that people would probably manage the money better getting 1/20th each year, but you also hear of people who wind up selling off their future payments to pay debts, probably at an even worse rate.
 
RunningBum said:
Those aren't the numbers though. Even with higher interest rates I think you got at least half the money in a lump sum (unless by 100+ you really mean 150 or so). With much lower interest rates it's a lot more. Mega Millions Lottery Jackpot: Should You Take the Lump Sum or Annuity? - ABC News says that a $500M jackpot less than 2 years ago would pay $359M lump sum--both amounts before taxes. Spreading the amount over multiple years doesn't help that much with taxes since nearly all of it will be in the top bracket each year anyway. That article says it's a no-brainer to take the lump sum from a financial standpoint. You could argue that people would probably manage the money better getting 1/20th each year, but you also hear of people who wind up selling off their future payments to pay debts, probably at an even worse rate.
Click to expand...

Ah that makes sense now. I was thinking the discount rate was a around 4% since 30 year treasury bonds are at 4%, but if the interest rate is based on the Fed discount rate than yes I see why you'd take the money up front.
 
clifp said:
The thing that amazes me is why do almost all the lotto winners take the lump sum? I've never done that math and maybe the interest rate they offer on the annuities is awful. But if you won $20 million, $1 million a year should be plenty for anyone and if you screw up and spend it all in the first couple of year hopefully by year 5 or so you'll get a clue about being rich.

So when we are talking $300 million or $15 million a year why you would elect to the $100+ million lump sum (and pay all the taxes up front) is incomprehensible to me.
Click to expand...

For me, I'd take the lump sum. Mainly because I've always been a "bird in the hand is worth two in the bush" kind of person. For example, I'd rather have $5 million today than $10 million a couple years from now.

A lot can change in a few years, including somebody's health, and I'd want everything up front so I can enjoy it now, and invest it myself, rather than waiting 20 years (or whatever the average lottery annuity runs for) to collect. Also, I'd worry about whether the company that's providing the payments would go bankrupt, out of business, etc, and leave me with nothing. I'd hate to get only a couple years payments and then find out the annuity was owned by a Bernie Madoff type company that went belly-up.

However...I'd bet the vast majority of people would be better off with an annuity if they're bad financial planners. Like you said, the first few years of payments gives them a chance to learn how to handle it (hopefully), so the remaining years aren't blown.
 
Call me a stick in the mud, but for me personally, winning the lottery would be miserable. I'd either have to give it away to endlessly needy relatives or be the bad guy in the family. Much better to be in the closet comfortable, than nakedly stinkin' rich. :D
 
travelover said:
Call me a stick in the mud, but for me personally, winning the lottery would be miserable. I'd either have to give it away to endlessly needy relatives or be the bad guy in the family. Much better to be in the closet comfortable, than nakedly stinkin' rich. :D
Click to expand...

I could easily be the "bad guy" in my family for failure to give handouts. If it meant having tens of millions but a pissed off family...give me the money. I have no problems saying "no" to people, even blood relatives. I've done it before, I can do it again.
 
You must log in or register to reply here.

Similar threads

2HOTinPHX
Possibly the worst start to retirement ever!!!
2 3
Replies
54
Views
7K
2HOTinPHX
2HOTinPHX
S
What would you ask for?
2
Replies
34
Views
3K
Koolau
Koolau
Tranquility Base
Role of Financial Consultant at Discount Brokerages
2 3
Replies
53
Views
4K
FLJim
F
O
Cellphone Rant.... warning it's long
2 3
Replies
73
Views
5K
HGTVFanatic
H
S
I'm FIRE(d)!
Replies
18
Views
3K
Dtail
D

Latest posts

Back
Top Bottom