May is starting out with a Powerball lottery that has an annuity value of $348 million. The reality is that this is an instant creator of multi-generational wealth. It’s nothing short of king-maker money, and it will make the winner have the mega-rich status overnight.
24/7 Wall St. has tracked many lottery winnings over the years. Unfortunately, many lottery winners end up broke. Some winners even end up in the poor house after just a few years. That is why we have created a how-to guide for lotto winners with 12 things not to do if you win the lottery!
The Powerball jackpot starts at $40 million and then grows at each drawing until someone matches the winning Powerball numbers. The current estimated annuity value of $348 million for the drawing on Wednesday, May 4, comes with a lump sum estimated cash value of $221.6 million.
Most people who win the lottery choose the lump sum payment rather than drawing it out over a lifetime. The official Jackpot odds are one in 292,201,338 for the larger sum. For a $1 million lottery winning without the extra ball, those five numbers for the $1 million prize come with odds of one in 11,688,054.
So what happens if you win the lottery? It is without a doubt that you just became filthy rich. What matters now is that this newly found wealth comes with an extreme responsibility. Again, many lotto winners end up broke again.
Imagine winning $10 million, $50 million or $200 million only to be poor in a few years. Those fortunate winners who become losers like that certainly will be the brunt of jokes at every gathering with friends and family.
The first thing that you need to do, outside of signing the winning lottery ticket and reporting to the state, is to line up solid financial and tax advice. Then you need to think about what sort of lifestyle you really want to have — and you are going to need a budget.
Some pitfalls that have wiped out lottery winners might seem obvious. But think about this: if the right things to do are so obvious, then why do people still go broke? If you want to keep up with superstars and become the newest high-roller, you might be dooming yourself and your new-found fortune. Bragging to everyone you know about how you just became filthy rich is another recipe for disaster. You might lose friends — or you could even lose your life.
So maybe this message hasn’t set in yet that you could conceivably blow the after-tax cash from your $226 million or so from the cash option. The 1980s film “Brewster’s Millions” made it real hard to blow just $30 million in 30 days — something the imaginative and reckless could accomplish in days (or even hours) now. Private jets, mega-yachts, entourages, private islands, mega-mansions, luxury cars, private concerts, luxury jewelry, fine art and other collectibles — they could all add up to $100 million or more without even being that creative.
Do you keep it all or become the world’s largest benefactor? Do you back all your friends and family businesses? Do you buy everything for everyone? These are just some of the things that a lottery winner will have to consider.
24/7 Wall St. does not want to see any lottery winner go broke. You should only have to get rich once. These are the 12 things not to do if you are ever lucky enough to win the lottery.