The new American Dream isn’t a life of hard work followed by the golden years of retirement. The new American Dream has become to “get rich quick” by winning the lottery. After all, the public is endlessly reminded by politicians and the media that the American Dream of our parents and grandparents has died. A life of hard work, saving money rather than spending it and endless planning and investing is just too much for many people to handle. And if the Powerball lottery is won on Wednesday night, it’s going to be one stellar start to the New Year.
The Powerball jackpot has now reached $337 million in annuity value for the Wednesday night drawing, and the cash value is a still a whopping $210.4 million. The Powerball can grow and grow. It starts at $40 million, then rises after each drawing until someone matches the winning Powerball numbers. And if this lottery gets away from you, there is now a Mega Millions lottery this Friday with a $306 million grand prize.
With such a large lottery drawing up for grabs on Wednesday and again on Friday, it really doesn’t matter whether the would-be winner chooses to take this payout over a period of 30 years or take the payment all upfront. Before taxes, it’s either a sum of $210 million now or it’s the equivalent of an annual salary that is in the top 0.01% for years. The long and short of the matter is that two jackpots each over $300 million is easily enough to create multi-generational wealth.
Winning the lottery is one of the greatest things most people could ever imagine. Unfortunately, there is a dark 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.
24/7 Wall St. has created a guide for lottery winners: the 12 things you should not do if you ever win the lottery. There is an old adage that lottery winners need to consider: No one should ever have to get rich twice. With extreme wealth comes extreme responsibility.
Those who become filthy rich overnight better have a serious plan in place to protect themselves from going broke. Imagine how bad it would feel to go from a decent life of mediocrity to being filthy rich overnight, only to lose it all and be in the poor house.
It is easy to get wrapped up in thinking about things you would do after winning the lottery. Almost everyone who plays the lottery has that moment where they think about the things they could buy and what else they could do with the money. Lottery players rarely think about what they should do before they go start spending their millions.
While the odds of winning the Powerball are astronomical — roughly 1 in 292 million — the lucky person, or persons, who wins better have a plan. And they better have a plan fast. The 12 things not to do here can also be used for anyone who comes into vast money unexpectedly through an inheritance, settlement or lawsuit, by 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 at all costs. Take this to heart, and it is no joke: your life may depend on it! And some people may think they can just handle all that new money without any help.
Most lottery winners choose to take the cash lump sum option rather than the annuity payout over 30 years. The reason is probably evident. Vast and instant wealth is just more enticing than just getting a multi-million paycheck each year. This is more money than almost everyone can imagine making in their lifetimes.
There are literally an endless number of temptations that the newly rich just sometimes cannot avoid. The first reality check is that it’s rather easy in modern times to blow through $100 million, $200 million or even $500 million if you want to. That fortune could be blown in weeks if there was limitless spending. A lack of planning and refusing to live within reasonable limits must be avoided.
Lottery winners should assume right at the start that their family relationships and friendships will be tested. And sadly, bragging about getting filthy rich could literally cost you your life. Actions such as getting a financial planner and tax advisory service and setting a budget are immediate needs that cannot be skipped. Avoiding this is a recipe for disaster.
Again, no one who becomes filthy rich should ever have to worry about going broke. Add up the costs of buying and then maintaining what the rich and famous just have to have: mega-mansions, yachts, private jets, luxury cars, lavish vacations, art and jewelry, private island retreats and endless other temptations. Then think about the insurance and the people who have to be hired to operate them or protect them. And why not have an entourage too?
None of the toys of the super-rich come cheap. Even a combination of just a few of these new vices could rather easily wreck your new vast fortune.
If there is one thing to take to heart before seeing the 12 things not to do, it is this: If ANY of these points sound silly or like they don’t matter, then the key lesson you need to take from this is that you are already at severe risk of going broke if you ever become filthy rich in a very short time.