Welcome Guest
Log In | Register )
You last visited May 19, 2022, 2:10 am
All times shown are
Eastern Time (GMT-5:00)

Survey: Many investors would make questionable decisions after winning the lottery

Dec 19, 2017, 9:18 am

Share this news story on Facebook
Tweet this news story on Twitter
Insider BuzzInsider Buzz: Survey: Many investors would make questionable decisions after winning the lotteryRating:

The odds of winning the Powerball jackpot are a slim 1 in 292,201,338; the Mega Millions is 1 in 302,575,350. But that doesn't stop people from dreaming about how they'd handle a big-ticket lottery win.

Asked to allocate a multimillion-dollar lottery win, consumers said they would put roughly two-thirds into savings — saving an average 52 percent of the prize for themselves and 16 percent for others, according to a new survey from TD Ameritrade provided exclusively to CNBC.com. Of the remaining funds, those hypothetical winners anticipate spending for themselves (11 percent) and on others (10 percent), and donating to charity (11 percent).

TD Ameritrade polled 1,005 American adult investors in early October.

As of Tuesday morning, the Mega Millions jackpot was $223 million and the Powerball was $269 million. Both games had their most recent jackpot wins in late October. (Although large, neither is a record amount: For either to land in the top 10 of U.S. jackpots, they would have to surpass the $448.4 million Powerball shared by two winners in August 2013.)

The next Mega Millions drawing is at 11 p.m. ET on Tuesday, and the next Powerball drawing is at 10:59 p.m. ET on Wednesday.

Making the most of a jackpot

Consumers saying they plan to save the bulk of a big lottery win was a welcome surprise, especially amid public stories of lottery winners who financially struggle or file for bankruptcy protection, said David Lynch, a managing director and head of branches at TD Ameritrade. He also cheered consumers' "pay it forward" intent of donating to charity and helping boost savings for friends and family.

"You hope that's actually how they do behave" if they win, Lynch said.

But other elements of would-be winners' ticket-claiming plans could prove problematic for achieving those financial goals.

Roughly 4 in 10 told TD Ameritrade they would claim the winning ticket immediately versus waiting to come forward, while 1 in 5 said they would claim the ticket "with no outside help" from a lawyer, accountant or financial advisor. Almost half would quit their job immediately. (See chart below.)

Those actions run afoul of advice experts typically give jackpot winners.

"Just slow down," Lynch said. "Don't make any quick decisions. Don't rush into anything."

Claiming the prize without or before consulting a team of experts could be an especially expensive mistake.

"Just going on your own and doing [the claim], it puts you a step behind," said Jason Kurland, a partner with Certilman Balin Adler & Hyman in East Meadow, New York, who is known as the Lottery Lawyer.

"This is such a lucky opportunity," he said. "Winners only get one chance to do it right."

For example, 90.7 percent of consumers told TD Ameritrade they would remain anonymous in claiming their prize. But the feasibility of that varies widely by state, Kurland said — and staying anonymous may require a lawyer's assistance in setting up a trust, LLC, or other entity ahead of claiming, or to negotiate with the state lottery commission.

Advice from a financial advisor and accountant can be key in helping you figure out whether to take the lump sum or the annuity, if it makes sense to quit your job and how much you'll have left after taxes for saving and spending. (That last line item is notably absent from how winners in TD Ameritrade's assessment plan to divvy up their prize.)

Your net take-home is an especially important number, said Cicily Maton, a partner and senior financial planner at The Planning Center in Chicago. Individuals who come into a sudden windfall (whether a signing bonus, inheritance or lottery win) tend to anchor on the initial number before taxes and other expenses, an inflation that can lead to overspending.

"The number that stays in their mind is, 'I'm a millionaire with $30 million,' not the day-to-day total," said Maton, who is also a certified financial planner.

Ideally, before you make any big purchases or pledge gifts to others, you'd sit down and make a "bliss list" of all your immediate wants, long-term aims and other dreams for the money, Maton said. Then you can start prioritizing and putting numbers to those competing goals, adjusting them as needed.

"We have a saying: 'You can do anything you want, but not everything,'" she said.

News story photo(Click to display full-size in gallery)

News story photo(Click to display full-size in gallery)

News story photo(Click to display full-size in gallery)

CNBC, Lottery Post Staff

We'd love to see your comments here!  Register for a FREE membership — it takes just a few moments — and you'll be able to post comments here and on any of our forums. If you're already a member, you can Log In to post a comment.

31 comments. Last comment 4 years ago by music*.
Page 1 of 3
Raven62's avatar - binary
25
New Jersey
United States
Member #17842
June 28, 2005
155294 Posts
Offline

Survey seems to Contradict what Jackpot Winners actually do!

Nearly 70% of all Jackpot Winners end up broke within seven years.

A mind once stretched by a new idea never returns to its original dimensions!

Catch-22: A dilemma or difficult circumstance from which there is no escape because of mutually conflicting or dependent conditions.

Corruptissima re publica plurimae leges: When the republic is at its most corrupt the laws are most numerous.

The best way to learn is to never stop being a student!

    Avatar
    * In hot pursuit of $ *
    White Shores- California
    United States
    Member #136471
    December 12, 2012
    6799 Posts
    Offline

    Survey seems to Contradict what Jackpot Winners actually do!

    Nearly 70% of all Jackpot Winners end up broke within seven years.

    I Agree!.. The " sudden wealth syndrome " kicks in the minute the thought of millions of dollars starts to marinate mentally. Some winners don't want to be told anything, sound advice is completely ignored. One has to have a brain that actually functions, before thinking about savings & the future. ....

    ...and yes, " The last Jedi" sucks more than a dyson.

     * Voice of Reason *   

    * People who say it cannot be done should not interrupt those who are doing it- George Bernard Shaw.

      Avatar
      Jacksonville
      United States
      Member #153799
      March 26, 2014
      780 Posts
      Offline

      In truth, we are making questionable decisions by playing the lottery at all.

      The reason so many go broke after winning is because they had poor money management skills before winning and after winning their skills did not improve.

        sully16's avatar - sharan
        25
        Ringleader
        Michigan
        United States
        Member #81738
        October 28, 2009
        97861 Posts
        Offline

        I've been saving my whole adult life, I would spend like a crazy lady.  Hyper

        Happy National Cheese Souffle Day!Lovies

          music*'s avatar - DiscoBallGlowing
          Fresno, California
          United States
          Member #157849
          August 2, 2014
          3959 Posts
          Offline

          I've been saving my whole adult life, I would spend like a crazy lady.  Hyper

           sully16, You remind me of the British woman who said, "I will spend, spend, and spend". She shopped till she dropped.  She did not win the lottery but did win in a sports betting game back in the early 1960's.

           Here in California, we have to wait six weeks before we get the check.  That will be plenty of time to hire financial advisers, accountants, attorneys, and lawyers. We can wait for a full year to claim the jackpot.

           Will you claim before the New Year or after January first, 2018?

          Party

           "We are all in this together!" 

            music*'s avatar - DiscoBallGlowing
            Fresno, California
            United States
            Member #157849
            August 2, 2014
            3959 Posts
            Offline

              There are no loans for retirement. I hope that the generation who will not see Social Security benefits will prepare themselves for retirement. 

             After I die will be the time for the charities of my choice to receive benefits. I will include them in my will. But my family will come first.

             "We are all in this together!" 

              lejardin's avatar - Lottery-014.jpg

              United States
              Member #118604
              November 4, 2011
              1443 Posts
              Offline

              On the "What Consumers Say they Would Do" list, I would do four out of the five right off.   Leave saving and investing for last.   In that I would be Sully2.    A home, a car, travel to find my location and depending how much the win is, helping sons and brothers would also be on my "Bliss List".

              Such fun winning would be even with the horrible odds.  No annuity at my age.  And taxes suck regardless. 

                weshar75's avatar - Lottery-042.jpg
                Mcminnville, Oregon
                United States
                Member #3013
                December 13, 2003
                5753 Posts
                Offline

                Good luck to you on powerball tomorrow music I hope you win a cool million even in California.-weshar75

                US Flag

                  Avatar
                  NY
                  United States
                  Member #147447
                  October 2, 2013
                  1683 Posts
                  Offline

                  with a large jackpot (more than 10 mil) i'd have to shift some into owning physical gold. 2008 happens all over again and they say "oopsie" and im sure that the national debt will never be decreasing.

                    KY Floyd's avatar - sunflowers avatar.jpg
                    NY
                    United States
                    Member #23834
                    October 16, 2005
                    4558 Posts
                    Offline

                    Survey seems to Contradict what Jackpot Winners actually do!

                    Nearly 70% of all Jackpot Winners end up broke within seven years.

                    The survey tells us what people think they would do. History tells us what winners really do.

                    As for the 70% figure, I'd like to know what happens to the people who have won MM or PB in the last 5 years or so. There are still plenty of people who clear a million or two, or even $5 million if they win state games, but the majority of PB and MM winners end up with a really big chunk of change. I know that some people have managed to squander $100 million or more, but you can spend pretty recklessly and still have trouble wasting that much money.

                      sully16's avatar - sharan
                      25
                      Ringleader
                      Michigan
                      United States
                      Member #81738
                      October 28, 2009
                      97861 Posts
                      Offline

                       sully16, You remind me of the British woman who said, "I will spend, spend, and spend". She shopped till she dropped.  She did not win the lottery but did win in a sports betting game back in the early 1960's.

                       Here in California, we have to wait six weeks before we get the check.  That will be plenty of time to hire financial advisers, accountants, attorneys, and lawyers. We can wait for a full year to claim the jackpot.

                       Will you claim before the New Year or after January first, 2018?

                      Party

                      I'd claim it as fast as I could, I need a housekeeper, Chef, personal shopper, asap. LOL

                      Happy National Cheese Souffle Day!Lovies

                        sully16's avatar - sharan
                        25
                        Ringleader
                        Michigan
                        United States
                        Member #81738
                        October 28, 2009
                        97861 Posts
                        Offline

                        On the "What Consumers Say they Would Do" list, I would do four out of the five right off.   Leave saving and investing for last.   In that I would be Sully2.    A home, a car, travel to find my location and depending how much the win is, helping sons and brothers would also be on my "Bliss List".

                        Such fun winning would be even with the horrible odds.  No annuity at my age.  And taxes suck regardless. 

                        My son starts College next year, winning the lottery would be much better then selling a kidney.

                        Happy National Cheese Souffle Day!Lovies

                          rcbbuckeye's avatar - Lottery-062.jpg
                          100
                          Texas
                          United States
                          Member #55887
                          October 23, 2007
                          13265 Posts
                          Offline

                          My son starts College next year, winning the lottery would be much better then selling a kidney.

                          Sully....

                          if you're doing student/parent loans, have fun with the FAFSA. It's worse than doing tax returns.

                          CAN'T WIN IF YOU'RE NOT IN

                          A DOLLAR AND A DREAM (OR $2)

                            Avatar
                            Simpsonville
                            United States
                            Member #163182
                            January 22, 2015
                            2875 Posts
                            Offline

                            I'd claim it as fast as I could, I need a housekeeper, Chef, personal shopper, asap. LOL

                            Sounds like a good idea to me.

                             

                            Let me win the big one and I'll post the results of my own survey.

                             

                            Sully 16 still have about a month left on Michigan's Powerball and Mega Millions.  Your is the only state of all that I played that doesn't have a beginning and end date for the multi draws.  I did six months in July...suggest they change it...LOL.