I don’t want to win the lottery. Specifically, I don’t want to win the jackpot. Of course, I could find a million or more ways to spend it. However, there’s so much stress that comes with the money that it may not be worth the trouble.
The first reason I don’t want to win the lottery is the taxes. If you take the lump sum, you will receive a fraction of the jackpot. A Powerball winner in 2002 only took home $90 million of a $314 million lump sum after taxes. His take-home was more than enough, but that was based on a large starting amount. What if the jackpot was $1,000,000? I would pay over $300,000 in federal taxes alone. Also, when I pay state income taxes, that is more money out of the door. Taking the annuity option doesn’t eliminate the taxes either. It just reduces how much you pay in taxes upfront. And it’s not only cash you pay taxes on – houses, cars, and vacations are taxed too.
The next reason I don’t want to win the jackpot is that I live in a state that will publicize my identity and location. There are only six states that allow anonymity if you win the lottery. Otherwise, everyone I’ve ever known that needs or wants something could attempt to contact me. There are stories of strangers and family members committing crimes to claim the jackpot winners’ money, which leads me to my next point.
There is a fabled “lottery curse.” Some winners lost their lives shortly after winning through malicious means. Others lost their lives due to drugs or alcohol. Others were left penniless because they didn’t know how to manage their new wealth. It does not affect every lottery winner, but there are enough stories to show the potential downfall of winning the lottery.
If I Did Win the Lottery
If I won, I’d take the annuity and keep working. A smaller amount at regular intervals would make it easy to budget. I like to think I’m good with money, but I’ve never had to handle millions abruptly or publicly. I would set up a will, estate plan, and power of attorney.
Winners are advised to get a lawyer, a tax accountant, and a financial planner. I would have all of those on my team of experts, but I would manage my money myself. Bernie Madoff and others have taken advantage of rich people with little involvement in their investments. I don’t want to be in that situation, so my advisors will not have access to my money.
I would pay off my debt and move into a tiny house to minimize my expenses. I would max out my emergency fund, long-term savings, retirement investments, income investments, and charitable contributions. After that’s all set up, I would give lump sums to my immediate family, then carefully consider anyone else’s one-time funding request. I would retire from my job once I am of age.