Having a $375 million lottery sounded big enough to entice lottery players, but after there were no winners of the Powerball grand prize, that has rolled up to $435 million. The next drawing will be on Saturday, June 10, 2017. As far as the $435 million annuity value, that actually generates a $273.1 million cash for those who choose the upfront all-cash payment option.
Whether lottery winners take the annuity payment or the all-cash payment, this is a vast sum of money so large that it represents nothing less than multi-generational empire-making money. The odds of winning the grand prize are one in 292,201,338, but the odds of winning $1 million are a more reasonable one in 11,688,053.
24/7 Wall St. has created a guide for lottery winners, which can also be used by anyone who unexpectedly or instantly comes into vast wealth. Any would-be lottery winner, or multiple winners, better have an idea ahead of time about what they should do if they win. Perhaps even more important is what not do if you win!
This is the 12 Things Not to Do If You Win the Lottery.
Winning the lottery has become the new American Dream. A life of hard work and saving up for years just doesn’t have the same sizzle as the instant wealth from winning the lottery. This is immediate gratification that doesn’t require nerves of steel, being smart in business or knowing how to invest, and it doesn’t require all those pesky responsibilities over a lifetime. And to make the American Dream even more bent toward the lottery now, the media and politicians keep telling the public that it is just too hard these days to get ahead and live well.
Whether you are talking about $435 million paid out over a lifetime or a lump sum of $273 million, this lottery winner needs to understand there are some serious pitfalls that must be avoided at all costs. Many lottery winners have gone broke, and some of them have gone broke in a short period. With extreme wealth comes extreme responsibility.
Most lottery winners will choose to take the cash lump sum option rather than the annuity payout over 20 years. Even after the discount and then having to pay the super-high tax bills, the reality is that $100 million or $200 million, or anything close to that, is more money than almost everyone you know can imagine making in their lifetimes.
24/7 Wall St. does not want to see anyone who attains new wealth suddenly go broke. There are many temptations waiting ahead that can be too much for some people to handle. As hard as this is to believe, it is just too easy these days to blow through vast sums of money. You can easily spend $100 million to $200 million in a period of months or weeks if you choose to. A lack of planning and refusing to live within reasonable limits have to be prevented at all costs.
Lottery winners need to assume that their family relationships and friendships are going to be tested by such instant and vast wealth. Bragging about getting super-rich could even cost you your life — and that’s no joke. Thinking that financial and tax advice are not needed will wreck you. Living on a budget, as lavish as it might be, is crucial to the newly wealthy keeping their wealth.
If any or all these points sound silly, then there is a key lesson that needs to be taken to heart: You are at severe risk of going broke after becoming filthy rich.
Some simple math can spell all this out. Add up the cost of private jets and yachts, of mega-mansions and lavish vacations with the rich and famous. Why not get a private island too? And throw in an entourage, and then think of all the insurance and security you will need to protect yourself and your vast collections. Art auctions, the best jewelry and luxury items, and vintage car collections are not cheap. Any combination of just a few of these can easily wreck your vast sum of wealth.
Hopefully reality is setting in here. The entire point behind this list of things not to do if you win the lottery is to keep anyone who becomes suddenly wealthy from going broke. After all, it’s hard enough to become wealthy, so don’t ever forget that you should only have to become rich once.
Here are the 12 things not to do if you win the lottery.