One of the things that irritates me is how the media always says that most lottery winners go broke in 5 years.
That is so not the truth!
Most lottery winners you never hear from because they are living their lives, enjoying their wealth and staying out of the media. You don’t hear from them because there is nothing to report. They have their winnings and they simply move on with living (just in a higher tax bracket).
The ones who end up in the news are the ones who are reckless with their winnings!
And the reckless ones that we know about do not outnumber the total number of people who have won lottery jackpots since the games began (state games as well as national). These people have managed to maintain their wealth quietly, and away from the media.
So my question is:“What would you do?”
Let’s start with a $40 million lump sum minus 39.6% in taxes
(I know some folks only play when the jackpot is over $100 million but the lump sum on $40 million is $26,500,000.00 and that is more than you could make on your job. I choose the lump sum because that is the most popular choice).
I am using the 39.3% in taxes because the initial 25% is not enough; you will owe an additional 14.6% in taxes…which means your take home (if you don’t owe state taxes) is:
$16,006,000.00
How much would you set aside to never touch, just collect interest?
How much would you invest?
How much would you spend on home, car, insurance, pay off debts and add to retirement? (you can give an estimated figure for all )
Would you start a private foundation? If so, how much would you put aside for the foundation?
How much would you give to family and friends?
Here is an example, (remember, this is just an example):
$16,006,000.00
|
$ (2,650,000.00)
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Tithe**
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$ (3,000,000.00)
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Foundation
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$10,356,000.00
|
Balance
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$ (2,240,000.00)
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14k to 20 people for 8 years
|
$ 8,116,000.00
|
$ (3,116,000.00)
|
Home, car, debts, insurance, add to retirement
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$ 5,000,000.00
|
Gov’t bond at 2.85% = $142,500.00 in interest
|
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With this example you can see how fast the money dwindles down but you still have $5 million untouched.
(If you want to use more then the $40 million suggested here, go to the previous results page on PB or MM and pick a jackpot amount this interest you).
Granted, should you ever win a lottery jackpot, you would be meeting with financial advisors on all of this. But I am curious to see what you guys come up with by doing your spending on paper.
Anyone want to give it a shot?
**I put the tithing in there as I know there are folks who love their church and would want to tithe 10% pre-tax to support ministries (food pantry, mission trips, youth group, benevolance, etc.) Checks and balances should be in place to hold any organization accountable that receives fundings.
Nonetheles, if this does not pertain to you, no worries, I am still interested in what you would do.