Americans are frequently reminded by politicians and the media that the American Dream has died. After all, a life of hard work, saving money and endless planning and investing is just too much for many people to handle. The American Dream hasn’t exactly died, but the new version of it is very different from that of your parents and grandparents. The New American Dream has become winning the lottery.
Last week the Powerball lottery drawing reached a $510 million annuity value with a $324.2 million lump-sum cash payout. There was no winner in Saturday’s drawing, so the Powerball lottery for the Wednesday drawing went higher to a whopping $650 million annuity value or a $411.7 million cash value — and now the lottery has reached a $700 million annuity value or a $443.3 million cash value.
Whether a lottery winner chooses to take this payout over a period of 30 years or takes the payment all upfront, this is more than enough money in either scenario to create a multi-generational empire.
Winning the lottery is one of the greatest things most people could ever imagine. There is also a very sad side to winning the lottery. Many winners end up losing all or most of their lifetime gift, and some winners go broke in just a few years.
There is an old adage that says no one should ever have to get rich twice. Those who become filthy rich overnight better have a serious plan in place to protect themselves from going broke. It is easy to get wrapped up in thinking about things you would do after winning the lottery. While almost everyone who plays the lottery only thinks about the things they could buy and what else they could do with the money, people rarely think about what they should do before they go start spending their millions.
24/7 Wall St. has created a guide for lottery winners, the 12 things you should not do if you ever win the lottery.
While the odds of winning the Powerball are about 1 in 292 million, the 12 things not to do can also be used for anyone who comes into vast money unexpectedly through an inheritance, settlement or lawsuit, becoming a stock-option millionaire or from the sale of a business.
There are some serious pitfalls that lottery winners and the newly rich must avoid. After all, with extreme wealth comes extreme responsibility. Take this to heart, and it is no joke: your life may depend on it!
Most lottery winners will choose to take the cash lump sum option rather than the annuity payout over 20 years. The reason is that it is vast and instant wealth, and it is money than almost everyone can imagine making in their lifetimes. And there are an endless number of temptations that the newly rich just sometimes cannot avoid.
The first reality check is it’s rather easy in this day and age to blow through $100 million, $200 million or even $500 million if you want to. Again, endless temptations are coming your way. A lack of planning and refusing to live within reasonable limits must be avoided.
Lottery winners should assume that their family relationships and friendships will be tested. This may seem like a joke, even if it is far from it, but bragging about getting super-rich could literally cost you your life. Thinking that mundane things like financial planning, tax advice and budgets are out the window is a recipe for disaster.