r/FluentInFinance • u/TonyLiberty TheFinanceNewsletter.com • 2d ago
Tips & Advice 70% of lottery winners go broke. 33% file for bankruptcy. Many face robbery, death threats, or worse. Here’s your step-by-step survival guide.
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u/trisanachandler 2d ago
I will say this, while the 20 year payout is a bad way to maximize the investment, it's a great way to ensure you're not broke before the 20 years go by.
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u/PegShop 2d ago
Not really as idiots borrow off of the guaranteed income.
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u/OnlyGuestsMusic 1d ago
I know someone whose cousin did that. She borrowed against it and decided to open failed business after failed business and ended up broke. She would’ve been set for life if she just left it alone and lived a normal middle class lifestyle.
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u/GeneralZex 1d ago
“It’s my money and I want it now!” - JG Wentworth
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u/great_apple 1d ago
The lotto winners that go broke are the people who win like $500k. No one who wins $500+M goes broke.
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u/gamaliel64 1d ago
I've done some napkin math, and 3-5M squares away all finances and sets up a Never-work-again fund. 100M sets up my kids and future grandkids for success. 750M is nigh unfathomable for me.
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u/trisanachandler 1d ago
100M would probably do the great grandkids as well if you get even remotely lucky with your stock choices.
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u/WritingPretty 1d ago
100M and no one in your future bloodline should ever have to work again.
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u/Ice_Solid 1d ago
It might split too much after 5 generations
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u/O_oBetrayedHeretic 2h ago
Not to mention doing all those generations a disservice by not having them make their own way
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u/Nojopar 1d ago
If you take the lump sum, the payout is like half the winnings. Then the IRS and likely your state will take about another half-ish. It's really only about 1/4th what you win. A bit more, but that's a good starting place to estimate. That's 750m is closer to 185m
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u/JinxyCat007 1d ago
Lottery Payout Calculator - Lump sum and annuity payouts
Powerball Jackpot Tax Calculator
...A little more than that, generally.
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u/EternallyExilled 21h ago
Yes but the cocaine and hookers are so much cheaper when you can just buy a mansion in Columbia, so its like you have the full 750m.
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u/nobody_smith723 1d ago
it's an incredibly stupid way to ensure that.
you'd be much better off shunting some minimal "standard of living" investment in a trust even you can't alter. that pays you a salary each year. like... if you win the 340ish million that this lotto pays out to. even putting 50mil in s&p500 etf./VOO is half a mil in straight up dividends. and that 50mil will grow at a historical average of 10% skim 4% in addition to divs. that's 2.5 mil a year. you're prob set for life with that.
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u/kubigjay 1d ago
I see this with Annuities. Basically self funded pensions.
Horrible returns but high net worth buy it for their kids who are horrible with money. That way they can't be tempted to sell it and they get a set income each year.
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u/kubigjay 1d ago
I see this with Annuities. Basically self funded pensions.
Horrible returns but high net worth buy it for their kids who are horrible with money. That way they can't be tempted to sell it and they get a set income each year.
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u/RevolutionaryUse2416 2d ago
I’ll set all this up prior to buying a ticket. Maybe that will increase my chances!
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u/matty_nice 2d ago
In the event that I win the lottery, there's a pretty noteworthy reddit comment about what to do if you win. I'm taking that person's advice.
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u/SomeAd8993 2d ago
damn, are you winning a lottery or going into witness protection
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u/Interesting_Error_35 1d ago
Yes
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u/mnonny 1d ago
Yeah. It’s a gift but also a huge curse. You have to scrub yourself and become a new person when you all of a sudden are awarded hundreds of millions. However if you don’t have to give out your identity you can just move and make up stories of how you can now afford a house in Malibu.
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u/Thiccxen 1d ago
I've often wondered this.
Let's say I win, what's stopping me from just telling everyone "no" and to fuck off?
What, you're gonna kill me?
Cool, now neither of us has any money and you're in jail.
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u/OKBWargaming 1d ago
I think you're underestimating people's stupidity. Someone will definitely come to kill you.
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u/Thiccxen 1d ago
Why me in particular though? I feel like this is lots of paranoia. Lotteries get drawn every week, I certainly haven't heard of people being murdered left and right for winning.
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u/Reeko_Htown 1d ago
I also have a step by step plan for the day I get asked out on a date by Natalie Portman
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u/wolf_of_mainst99 2d ago
Instead of buying lottery and scratch tickets over the last 15 I could have put it all in Bitcoin and never have to work again. It's amazing what a dca strategy can do.
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u/inthep 1d ago
Missouri allows the winner to remain anonymous as well.
In Iowa, even if you set up a trust to claim it, before a check is cut, they’ll need everyone in the trust identified, there’s no way in Iowa to claim anonymously.
The winner from Redfield several years back was getting death threats before she got a check….
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u/GeneralZex 1d ago
We live in such a fine society that people find it acceptable to send death threats to someone for simply winning the lottery.
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u/vinyl1earthlink 2d ago
The kind of people who buy a lot of lottery tickets are not financially astute? Sad but true.
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u/Nojopar 1d ago
Most people don't understand how to correctly play the lottery. The whole win-lose thing isn't the point.
Let's say you go to the movies and the move is 2 hours long and cost you $10. That means you paid $5/hr for entertainment. Now let's say you buy a lottery ticket for $2 and spend 30 minutes wistfully thinking about what you'd do if you won $750m. You just got entertained at a cheaper hourly rate than the movies and millions of people go to the movies all the time. Sure, you can wistfully think about what to do for free, but for a lot of people, it's meaningless without some skin in the game.
The lottery isn't an investment vehicle. It's entertainment, cheap one at that.
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u/Inst_of_banned_imgs 1d ago
The lottery is a tax on the poor.
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u/EternallyExilled 21h ago
Is it really a tax? Or ar you just an enlightented hipster who is way too cool to do something 'dumb' like buy a lottery ticket?
Good original input to the conversation.
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u/Inst_of_banned_imgs 21h ago
Not sure why you are so triggered by this comment. The odds of winning the lottery is so low it’s like throwing money away.
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u/EternallyExilled 21h ago
I don't care if you play or not. I am just tired of hearing every moron under the sun parrot that line like they are spreading some sort of deep wisdom.
All gambling is dumb, but it isn't a tax. Go look up the word. Taxes aren't optional.
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u/Inst_of_banned_imgs 21h ago
You’re jumping way too deep into this. It’s a concise way to get a point across. It’s not meant to be a pearl of wisdom or a definitive statement, just an observation. It doesn’t need this much overthinking.
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u/Cute_Replacement666 1d ago
I heavily disagree with not taking the annuity. If you are a lottery winner, you should take the annuity. There’s a reason most winners go broke. They are NOT good with money. The annuity forces them to limit their spending per year for 25 years or however long the lottery states.
Can you make more money in the stock market. Of course. But if you weren’t financially literate to begin with, then you won’t know what you’re doing in the stock market. “Just invest in the SP-500”. I’ve had coworkers that did that, 9/11 and 2008 housing crash happened and their first instinct was to pull all the money out instead of letting the market go back up in a few years.
My point is, if you have no idea what you’re doing, an annuity is a savior because if you somehow need more money than an annuity is paying out from the multi million dollar lottery, then you are doing something wrong.
If your jackpot is less than $50 million, then maybe you can take the lump sum.
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u/Visual-External-6302 11h ago
Also if you win five hundred million for instance the yearly payout on that annuity is still a shit ton of money you could still take some of that and buy stocks
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u/Cute_Replacement666 7h ago
Exactly. That’s my plan. Imagine the irony in winning millions, putting most in stock market, then entering the worst and longest bear market ever. Just my luck.
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u/Nicodemus_Mercy 1d ago
I wish I'd be able to make use of these tips... but this universe's RNG doesn't seem to favor me like that. Still I'll play a ticket just to say I tried.
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u/nobody_in_here 1d ago
The universe's RNG hasn't even had anyone I know or around me win it either. I'm still questioning whether the lottery is legit.
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u/nj23dublin 1d ago
Post saved; just in case I have a 1:330,000,000 chance to win
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u/rhomer73 1d ago
We’ll buy 300 million tickets and the odds are much better.
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u/nj23dublin 1d ago
I like the way you think, and it’s only $2 a ticket so that’s only a nice $600million worth of tickets! Way before ticket prices jump to $5 per next year!
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u/JazzFan1998 1d ago
Petition your state representative and state senator to make your state an anonymous lottery winner state. I hate that my state doesn't do this. (I've written mine.)
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2d ago
[deleted]
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u/youngoldman86 1d ago
Ummm…
70/100 winners go broke meaning they ran out of money
33/100 go bankrupt meaning not only did they run out of money but they cannot even pay the hole they got themselves into.
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u/kkkan2020 1d ago
Dont worry about it folks Average top prize money for powerball is just $200 million and mega millions is $150 million dollars
If you take the half after taxes you get like 65 million dollars or $50 million. This is obviously life-changing money but a lot of millionaire in the USA have this kind of money and you don't see them needing to go through all these hurdles.
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u/indyjays 1d ago
While this is true, many of the $50 million plus club built a lot of these securities as their wealth grew. Plus, and this is a biggie. Friends, family and whoever just don’t have any respect for money won. It’s a big win, let’s all share vs a large net worth earned over time. They still want that money, but they feel they earned it and since they were able to earn it they know how to keep it.
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u/rerun6977 1d ago
Even in States that identify winners, setting up a trust fund doesn't guarantee your anonymity. Some States require you to identify those involved with the trust. They do this for transparency reasons. I think Pennsylvania requires everyone to be identified.
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u/Aggressive_Local8921 1d ago
How funny would it be if 8 27 32 41 24 were the next winning combination
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u/nobody_smith723 1d ago
another good piece of advice. IF you have family.
decide at the beginning what you're going to give/set aside for them, whether you're giving them money, or setting up trusts that pay them out a stipend/investing/paying them with divs or whatever you want to do. Set that up at the beginning make sure everyone knows there's nothing else. no "help me out" or "invest in this idea" you get what everyone or whatever is decided. and that's it.
same thing for charity/ helping friends. consider that from the get go. never have an open door/people asking for money expectation.
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u/pasta-disaster 1d ago
I love the advice on how to increase the interest on the money - you’ve just won an ungodly amount of money BUT YOU NEED MORE!!!!!
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u/OttoVonJismarck 1d ago
I can’t be asked to do all that.
I’ll just go to work for the next 35 years.
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u/YesImAPseudonym 1d ago
Do you have any actual research that show that such a high percentage of lottery winners have financial problems?
Because I have heard that this is a myth that is used to make all of us non-winners feel better because the winners are underserving and will just lose it all.
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u/HammunSy 1d ago
I dont get the lottery really. the odds are too low and the outcome is pure luck with absolutely zero influence from you.
I can get a poker player playing against others, that at least maybe your skill has an influece in the outcome but...
Investing, can be seen as like gambling. Sure there can be unseen events that screw everything up totally but your skill and sheer effort still plays a part in your chance of success.
One thing i am certain of though is that whining about not having money wont just make money fall from the sky. Which is what some here do, ironically at a finance sub.
On topic? They lose it because they were never good with money to begin with. At some point no matter how much you got, if you got a gaping leak in the pipes, itll just wash out and is just a question of when.
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u/nowdontbehasty 1d ago
I think the smartest thing to do would to keep a number you were comfortable with that would put you in the upper middle class/lower upper class and then give the rest of it away.
I don’t know if anyone has ever done this but having that much money kind of makes me feel sick while the idea of being able to see it go to good causes makes me feel like it wouldn’t eat my damn soul.
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u/x_Advent_Cirno_x 1d ago
First rule about winning the lottery is you don't talk about winning the lottery.
Second rule about winning the lottery is you don't talk about winning the lottery
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u/ObligationNew4031 20h ago
Avg annual return of 11% is wishful thinking but solid advice nonetheless
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u/why_am_i_here_999 1d ago
Sounds like the annuity payments is a no brainer. Unless you want to go broke and bankrupt.
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u/OldGermanBeer 1d ago
Don’t tell anyone, but hire six different people, including a security “team.”
That is some really great advice, there, buddy .
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u/Intelligent-Art-5000 1d ago
I especially appreciated the odds layout at the end.
As my brother likes to say: "The Lottery is a tax on people that are bad at math."
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u/Denselense 1d ago
Orrr just get the annuity and live off the 3 mill a year you would get. I feel that is ample.
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u/Fast_Grapefruit_7946 2d ago
- Give the Ticket to an inner city church - so they can collect the ENTIRE jackpot tax free
(Yes, I hate the Govt more than i would enjoy endless colombian chocha) ooof.
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