There soon will be some new rather filthy rich people in America. The two major lotteries have combined jackpots worth more than $750 million! Tuesday night’s Mega Millions lottery drawing is $470 million in annuity value, and the next Powerball drawing is set for Wednesday, October 10, with an estimated jackpot annuity value of $282 million.
Every lottery player now knows, or at least should know, that the cash options are lower on the lump-sum cash basis. The Mega Millions has a lower cash option of $265 million, and the Powerball’s cash option based on the current jackpot would be $161.1 million. Still, this is a total gross value of more than $425 million up for grabs in the instant lump sum before taxes. Even a small fraction of that is enough to create multi-generational wealth.
It turns out that playing the lottery has become the new version of the American Dream. That old boring version of the American Dream requires a lifetime of hard work, planning and advancing in careers without much distraction. Winning the lottery changes all that, and the wealth is there to grab now without any hard work and without any qualifications other than buying a ticket.
Winning a lottery even one-tenth of the size of either the Powerball or Mega Millions will make people instantly in the one-percenters club. Still, there is a dark side to winning the lottery. Many lottery winners actually manage to go broke, some in just a few years. 24/7 Wall St. does not want to see anyone go broke. That’s why we have created a self-help guide with 12 things not to do if you ever win the lottery.
The odds of winning the major jackpot have been roughly one in 302 million. And lotto players should consider that those odds are lower than being struck by lightning on a sunny day. Still, the thought of becoming filthy rich in an instant has made the lottery irresistible to millions of Americans.
Now for the hard part. It’s imperative to have a game-plan for if you ever become filthy rich out of the blue. The tools for what not to do if you win the lottery can also be applied to anyone who comes into fast and unexpected wealth from a business sale, an asset sale, an unexpected inheritance, a legal judgment, or even be applicable to those who become stock-options millionaires. Keeping a lifetime of wealth requires planning, and it even requires some sacrifices. No one should ever have to get rich twice. This is why lottery winners have to act fast, and they need to avoid the unending temptations that can rob unwitting people of their newfound wealth.
Purchasing an endless number of things can erode vast wealth. But having to keep paying for those things, followed by poor decisions and falling under the influence of friends and family are just some of the issues. There are predators and other considerations that have to be avoided at all costs.
Imagine what happens if people you know, some of whom you may not necessarily like or think very highly of, find out that you just became filthy rich. You could become an easy target. It’s sad to say, but there have been some unlucky lottery winners who have lost their lives. Bragging about getting filthy rich could get you killed.
Most lottery winners choose to take the lump sum cash option to have instant and vast wealth rather than to get paid out over a lifetime. It’s easy to understand why. It’s that instant empire-making sum that requires no waiting at all. All the glitz and glam still requires financial planning, budgeting, understanding taxes and investments, and a slew of other actions for anyone coming into wealth to keep their wealth. Just ask the dozens and dozens of well-known movie stars and musicians who have risen from nothing into the stratosphere and slid back down to being broke. Do not let this happen.
Endless spending is just one easy way to go broke. Add up the cost of buying mega-mansions and yachts, private jets and luxury cars, and lavish vacations. Then think about the cost of fine art and collectibles, antique cars and the best jewelry money can buy. And of course you could rent a private island or take everyone you know on a lavish private cruise. You could even throw in a private concert from your favorite music performer. The costs become massive quick, and burning through $100 million, $200 million or even $500 million is pretty easy to do when you consider the perpetual costs of insurance, an entourage, private security and taxes.
Take this one lesson to heart: If it sounds even remotely silly that you need to set up a strict financial plan and that you need to put up safeguards to protect your new empire-money, then you are already at severe risk of going broke if you ever become filthy rich.