General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsDear Powerball Winner: Take Our Advice and Take the Annuity
New York Times:If Im reading you right, you should probably take the annuity.
First, some background: You might not realize this, but the top prize in the $1.5 billion Powerball is not actually $1.5 billion. (Nor is it $999 million, as many of the three-digit-readout lottery signs around the country say it is.) If you take the prize as a one-time cash payment, you will get a mere $930 million, before taxes.
If you want $1.5 billion, youll have to take it in installments over the next 30 years. Thats a long time, and so most people take the cash, according to Kelly Cripe, a Powerball spokeswoman. But I think most of them are making a mistake, for the following reasons.
bigdarryl
(13,190 posts)brooklynite
(94,614 posts)FWIW - even multiple winners will need to think about how to manage newfound wealth that they're not used to.
yeoman6987
(14,449 posts)After I turned in the ticket, I'd go on a world cruise (maybe twice) just to get the oh my gosh he won junk out of everyone else's mind. If they wreck my house (in gated community so doubltful) who cares. Hopefully being gone for awhile will make it easier to "survive".
pnwmom
(108,980 posts)hobbit709
(41,694 posts)I'm 65 now. I have no kids. Take the money and run is my attitude.
alcibiades_mystery
(36,437 posts)Moreover, the payments for an annuity of that size are plenty large to live really, really, really well for every month in which the payments come through, including Month 1.
It's really a question of whether you want more money for your heirs / philanthropic ventures or less.
Goblinmonger
(22,340 posts)You would have more money than if you took the annuity. And you'd only need a relatively good mutual fund.
Now, I realize some people will burn through the money if they don't have the annuity, but if we are talking about having more money for your heirs as being the key, then you take the lump sum and invest most all of it and live off the earnings.
1939
(1,683 posts)The IRS want's to tax your estate at the "current value" of the annuity when it is transferred by death.
I say to take the money, invest it all in blue chips, and only spend the income each year from the $600 million after income tax. $600 mill @ 3% would give you $18 million a year to play with which should be enough without touching the principal.
Blue_Adept
(6,399 posts)in that the rules changed in the last couple of years so that you cannot transfer it.
alcibiades_mystery
(36,437 posts)It's an annuity certain. It's part of your estate.
brush
(53,794 posts)But even if you're younger, say mid-thirties, after you pay the taxes on 930 million, you still end up with 600 million give or take.
Invest the principal in a stable securities on live off the interest.
That's way more than enough to live on, insure your families future and your future generations, give to your favorite charities, etc.
Getting to old age is not guaranteed either.
I say take the money.
TexasBushwhacker
(20,204 posts)on high earners. I certainly wouldn't expect them to go down. Plus, I'm almost 60. It's unlikely I'll live another 30 years. I'd rather take the lump sum and make plans with it now.
I think the best advice I've heard is to take no more than 5% to pay off debts, have a little fun and be generous. Wait a year or so and just let it sink in and think about what you would really like to do with it.
brooklynite
(94,614 posts)FIRST: Do nothing (don't cash in your ticket) until you've discussed the implications with a lawyer and a financial adviser.
SECOND: Do nothing different in your lifestyle for six months. Pay off your debts if you want to, but don't start spending or giving away cash.
ProfessorGAC
(65,082 posts). . .for someone who wins a $20 million dollar prize. With a number this big, assuming one is the sole winner, the second item is undue caution.
As to your first, it's best to make sure the commission knows who the winner is. You can put them off before you go to claim the prize, but you should make sure they know who you are.
Takket
(21,581 posts)TeamPooka
(24,231 posts)CorkySt.Clair
(1,507 posts)At least that's the way it was a few years ago.
Of course, some state's require the winner be disclosed.
wheniwasincongress
(1,307 posts)some states require the winner's name to be public?
Kennah
(14,276 posts)JonLeibowitz
(6,282 posts)ohnoyoudidnt
(1,858 posts)I would definitely talk to lawyers and financial advisers before cashing in the ticket, but with a jackpot like this as soon as cashing in I would take my immediate family elsewhere like a private island resort maybe in the South Pacific with a security team for a while. That is a lot of money and there are a lot of crazy people, who knows what someone might try to do. I'm thinking some secure low interest bonds or something like that and only touching the interest would be a good way to go.
Drahthaardogs
(6,843 posts)I would disappear for a month or two and then change my name as soon as possible.
ProfessorGAC
(65,082 posts)The assumptions made as to how the money could be broadly diversified are the basis of most the argument and the rate of return suggested is WAY too low.
Also, if a large portion were distributed into multiple funds, those would pay dividends which are taxed at a FAR lower rate than regular income and one is not required to take every dollar in dividend from a fund. So, if you had $300 million in funds making just 6% aggregate, and you took 10% of that, you would be getting $1.8 million a year taxed at the dividend rate and the remainder would still be going up at 5.4%.
I suppose if someone 25 wins the prize, this might make perfect sense as a long term guarantee. But, anybody over 45 would be foolish to not pay someone a million (tax deductible) to distribute and diversify the winnings and the math will work out pretty favorably over the life span.
justiceischeap
(14,040 posts)A piece of advice is that you'd start getting contacted by places like JG Wentworth and Peachtree if you take an annuity. If you choose to sell future payments, they get like 40% of that money. Not a wise decision but one that many people make because they're in desperate need of money when they contact these companies.
They will tell you it's smarter to sell that annuity now than to hold on to it because of future "depreciation" of said money. Meaning 1 million in 30 years won't buy you what it can today.
I'd avoid these places if possible.
MillennialDem
(2,367 posts)lottery and I don't study it extensively).
Having said that
Either is so much money that even if you spend it like a drunken sailor, you will be fine.
I actually wonder how lottery winners go broke. Seems like unless you did something like buy your own private jet or give away money to every relative, friend, neighbor you've ever known it would be impossible to do that. You could for example, buy a first class intercontinental plane ticket EVERY DAY ($5,000 to $10,000. We'll call it $10,000) and that would come out to $3.65 million for a year.
Takket
(21,581 posts)MillennialDem
(2,367 posts)have on their hands. You don't need any more money stupid! :p
CTyankee
(63,912 posts)at Morgan (is it Morgan Chase now? I'm confused) and I would talk with her. She is quite wealthy due to a terrible accident that killed her husband and she got a settlement that was way over a million. She was one of my major donors when I worked at Planned Parenthood. She's good politically and ethically and I know her well enough to entrust money to her judgement. Not that I wouldn't want to be closely involved but I want to give away lots of it and would need someone I know very well and trust.
Of course, all of my kids's kids would have immediate college funding anywhere they would be able to get into. but other than that I wouldn't want them on Easy Street. They need to get out there and work hard for their goals...that is where happiness and value lies in life, IMO.
I'd just love to give Bernie some money but I'd be disappointed if his campaign would suck up to me. Yes, I'd love to talk with Bernie but not because of a gift I'd made.
I would also contact my stepdaughter who is a rabbi and extremely progressive. She could give me some advice on charities/activities she respects. Also, I'd contact my niece who is a United Methodist minister in North Carolina for her advice/recommendations. I'd probably like to set up a fund dedicated to her sister who died due to gun violence. I'd probably set that up with one of the gun regulation organizations (or all of them actually)...
HughBeaumont
(24,461 posts)He pretty much blew his cash on nothing but depreciables and liabilities. Reading further, the dude also did and sold drugs . . . narcotics drugs. He thought and spent like he had Tom Cruise money. Problem is, no one told him that he's only got 27 million ONCE . . . unlike Tom Cruise.
For instance, you're an unemployed cable installer. Who do you know that you need a 2 million dollar private jet???
MillennialDem
(2,367 posts)the lump sum after taxes.
Which would be hard to blow even if you were this fool. :p
I guess that's why I'll play and thus never win (I'm a math professor. my mom rarely plays but even then I tell her not to). I'd certainly build a custom house, possibly in Europe, with a sub basement or even sub sub basement (2 or 3 levels of basement). I'm a weirdo I know but it would be great for my partner and I to have the perfect movie theater / computer gaming studio with no outside noise. But otherwise, the house would be only at the high end of a middle class home for floor size.
Maybe that comes up to $1 million (probably considerably less). After that, throw in a few niceties, like maybe one expensive plus some decorations, furniture, and electronic toys for the house. And even then it's still going to at most, hit $2 million in total for the house + that stuff.
At that point, it's ongoing maintenance spending for trips and the like, but we wouldn't leave that often. I'd certainly keep a lot, but I'd also donate a lot to SENS, cryonics, and set up a non-profit for trans people.
hobbit709
(41,694 posts)Tanuki
(14,919 posts)..."On August 5, 2003, less than a year after Whittaker won the lottery, thieves broke into his car while it was parked at a strip club in Cross Lanes, West Virginia. The thieves made away with $545,000 in cash that Whittaker carried around in a suitcase.[6] When asked why he would carry that much money around with him Whittaker responded "because I can". In another incident, two employees at the club, the general manager and a dancer-manager who were romantically linked, were arrested and charged with a plot to put drugs in Whittaker's drinks and then rob him.[5] On January 25, 2004, thieves once again broke into his car, this time making off with an estimated $200,000 in cash, but this was later recovered.
On September 17, 2003, Jesse Tribble, an 18-year-old on-and-off-again boyfriend of Whittaker's granddaughter Brandi Bragg, was found dead in Whittaker's home in Teays Valley, West Virginia,.[7] A coroner's report indicated that he had died from overdosing on a combination of oxycodone, methadone, meperidine, and cocaine. On December 20, 2004, Brandi Bragg, 17, was found dead on the property of a male friend after being reported missing on December 9. Her body was wrapped inside a plastic tarpaulin and dumped behind a junked van. No one was charged with a crime. Cocaine and methadone were found in her system, but the cause of death was listed as "undetermined."[5]
......
Whittaker was later sued by Caesars Atlantic City casino for bouncing $1.5 million worth of checks to cover gambling losses. Whittaker also countersued, claiming that his losses were supposed to be credited due to a slot machine he developed and that they in fact owed him money.[9]
On January 11, 2007, a legal complaint against Whittaker alleged he claimed that on September 11, 2006, thieves took all of his money.[10] The thieves, according to the account, went to 12 branches of the City National Bank and cashed 12 checks. The incident came to light because Whittaker had not been paying money to a woman who had previously sued him. Kitti French filed the complaint earlier in the week, requesting court costs and money from Whittaker.
On July 5, 2009, Ginger Whittaker Bragg, Whittaker's 42-year-old daughter and the mother of Brandi Bragg, was found dead in Daniels, West Virginia. No explanation was given but officials did not expect foul play.[11]".....
HughBeaumont
(24,461 posts)That's like, a whole decade of bad news for someone who wins $300 million. It's a little bit of bad luck and horrible decision making and probably a lot more shadiness than he's letting on. For instance, who in the hell carries around half a million in cash?
Tanuki
(14,919 posts)it was a huge story locally. Everyone thought he would handle his winnings quite well, because despite coming from a very modest background, he had built multiple construction businesses from scratch and was already a self-made multi-millionaire before he won. It was shocking how quickly his whole life seemed to unravel.
Pathwalker
(6,598 posts)of self holding ticket. Step4: Purchase Safety Deposit box, place ticket and photos inside, NOT telling bank officials what's inside. Step 5: Speak to the most honest lawyer( ) you can find. Step 6: Meet with financial planner. Step 7: CHANGE PHONE #. Step8: Contact Lottery Officials. Step 9: Have fun, while being sensible.
Mariana
(14,858 posts)When they won the lump sum wasn't an option, but a year or so later it became available and they took it. I don't know how much the discounted amount was. They didn't give away any of it to anyone, they didn't overspend that we could see, and they actually made money afterward by flipping houses while that was profitable. Nevertheless, within five years they were broke and in debt, and they divorced. Did they get scammed out of it somehow? Did they take too many trips to the casinos? Who knows? They were and still are very secretive about it, so we can only speculate about what happened to that money.
jmowreader
(50,560 posts)With the amount of money we are dealing with here, you could find three reputable financial advisors who'd set up accounts that would disgorge, say, $1000 per week per banker into a checking account. (Three advisors producing $1000 per week is better than one producing $3000 - the odds of all three going out of business is pretty damn low.) Once you do that, assuming you never close those accounts, there's no way you can actually go broke.
There are four basic ways to go bankrupt as a lottery winner: start gambling, develop a drug habit you didn't have before, invest in pie-in-the-sky businesses (Mark Twain went broke this way: he was fascinated by technology and funded a lot of super speculative projects that failed, like the Paige Compositor typesetting machine) or start giving money to "long-lost relatives" who weren't actually relatives at all.
MillennialDem
(2,367 posts)manually tapped but a hassle to manual tap (takes a few days to get the money, etc).
Of course, I don't play the lottery, or gamble, so this is purely speculative outside of winning a giant lawsuit or having a relative richer than I think he or she is leaving me an inheritance.
Or of course, what I plan to do when I finally retire. But I'm only 35, 30 years of this poop left
haele
(12,660 posts)Those who win a million or under do a lot better than the big winners.
We did a study of the average experience of 12 lottery winners of around $25 - $30 million.
Year 1 - they get the big payoff of $8 - $15 million, pay their taxes and bills, take a couple trips, buy a couple houses and maybe invest in the hobby business - maybe a restaurant, arts and crafts consignment store, a nursery - that they really, really wanted to do instead of what they did for their 9-5 job. Put aside money for the kids. Upshot is, there's an average of $5 - $7 million left over after the spending spree. The leftover money goes into one, maybe two accounts.
Year 2 - More trips. Giving money to friends and family who need it to make it a bit easier for them, and so that they will leave you alone. The business does what businesses do. As personal and business problems arise, they dip into the leftover money to the tune of probably around $500K "no big deal, right?" and there's usually not enough business revenue to make up for the dipping into your lottery winnings. And then there's the taxes and costs to manage money like that - property taxes and business fees, and money management fees, and legal fees (your lawyer and accountant are very happy to have you, at around $10 - $20K a year each...) and, of course, the capital gains/income tax on the interest for money that is sitting in that account -
So that $5 - $7 million ends up being around $4 million, after all is said and done, and you and your spouse are looking at each other trying to figure out where that money went. It's starting to get stressful, because the interest on the winnings just about covers the taxes and fees, and the business is sucking money, and your kids are starting to be whiny brats about wanting a Ford GT or BMW SUV to show off to their friends, because hey, now they've got money....
Year 3 - wash, rinse, repeat of the previous year. You figure you're getting between $80K and $100K in interest per annum on what's left of your lottery winnings, so you and your spouse decide "no more touching the principle, we'll live off the interest". You both decide to switch the accounts to annuities to lock the payments on a yearly basis for the next 30 years, but haven't realized that the fees to do so take about $200K away from you, so you'll actually be making $60 - $80K. Which would be okay, if your business does well...but...
Your business's landlord raised his rent, and there's been an issue with some equipment there. Your business is still struggling to get off the ground. Or your house needs repair work, or a car, or some other major issue. Your accountant may or may not be cheating you. By at the end of year 3, you're down to $2 million, and your spouse is not loving life.
Year 4 is usually when the divorce happens. The business gets sold or closes its doors, the good house goes to the more dependent spouse, and property gets split up between the two of you. You sell the kid's fancy $100K cars at a significant loss because no one would be able to afford the insurance anymore.
You have maybe $800K in the bank to live off, no business, no job, and you're starting over - maybe with child support payments hanging over your head.
So, you can spend that money on a modest new home and go back to school to find a better job than the one you had - draining through the rest of that money for the next 3 - 4 years as you get your degree, or you could "retire" and live off that $800K as sort of a trust-annuity ($30,000 a year for 2% over 30 years) if you're old enough to get Social Security and Medicare to supplement it.
The problem is the windfall most lottery winners have is that the winnings are both too large and too small. People have a habit of living to the financial level that they have at the time, even if they know that level is not sustainable. Most people do not have enough control over their emotions that "well, just a little" or "I always wanted" will usually sneak in because they want so hard. It's worse for people who think they're better than that...and the people you think would be better at handling money - bankers, money managers - actually do worse when they win the lottery.
But, the conclusion from our study is that it's far better for an individual to win between $50K and $500K - just enough to pay off the bills, do some needed repairs, and have a little windfall fun - than it is to win over $2 million.
So that's how most big lottery winners go bankrupt.
Haele
Takket
(21,581 posts)after reading about it, it just scares me. basically they invest your money..... what if there is a global financial crisis? Or what if there is some war that the government needs to fund and sees I left a billion dollars in some annuity? I wouldn't put it past them to seize those funds if they needed them in a crisis.
My fears may be irrational but in a country where Donald trump is leading for a major party nomination, I would rather just take my cash option now and have no worries about missing out in the future.
What I think people SHOULD do it take at least half your winnings and put it in some sort of trust that you cannot access until you are 65. so even if you blow half your money now, at least you have a retirement later.
MillennialDem
(2,367 posts)brooklynite
(94,614 posts)...just assume the evil Government will likely confiscate your bank account.
CTyankee
(63,912 posts)when you get older you need to pay more and more for personal help. When my husband was recovering from back surgery I just loved his caregiver who came over to help him bathe and dress and did food shopping and cooking and light housework. Also laundry. Hell, I need help with all of these...and I pay my housecleaner now a lot of money per hour...but she deserves it, IMO. These workers don't make enough and so many of them work their butts off just to live...
tazkcmo
(7,300 posts)Doesn't matter where. They're all the rage. In fact, I'd surround my wall with a moat and fill it with man eating dog sharks equipped with Death Stars! Now THAT'S a Wall!
Takket
(21,581 posts)The beauty of my Wall is no one could get over it because you couldn't even get to it what with the moat and dog sharks and all. I'd also save tax payer money by keeping it about four feet long. A wall for the People!
Takket
(21,581 posts)MrScorpio
(73,631 posts)Unless I'm too gawd damned old to live another 30 years. Then I'd blow as much of it as I can while I still have the time.
left-of-center2012
(34,195 posts)I'm taking the one time lump sum.
840high
(17,196 posts)Lucky Luciano
(11,257 posts)A HERETIC I AM
(24,371 posts)Lucky Luciano
(11,257 posts)A HERETIC I AM
(24,371 posts)So unfortunately, no!
dembotoz
(16,808 posts)with a payment each year i would be unable to blow it all buying tiny parachutes for lemmings....
i would be a new chance to do something stupid the next year
Renew Deal
(81,866 posts)Or will future "budget constraints" force them to stop paying at some point?
Person 2713
(3,263 posts)rjsquirrel
(4,762 posts)Every dollar you spend feeds the corporate beast and replaces 10 cents (the amount that goes to anything but profit ) of corporate taxes for schools and roads and the arts with a regressive tax on the poor and addicted.
Lotteries are the state acting as a drug dealer. I used to have to sell lottery tickets in a liquor store. It seemed to me well more than half the buyers were poor and addicted to gambling with money they didn't have to waste. It was so sad.
Progressives should boycott lotteries.
Your odds of winning are so small it's a joke.
BeyondGeography
(39,376 posts)ladyVet
(1,587 posts)Though my father is close to being 86, my mother to 78, and they're doing pretty good, considering their health issues, I can't guarantee I'll do as well.
For me, it makes more sense to take a lump sum, take care of it, have loads of fun, and be able to leave the rest to my boys. Lottery winnings aren't inheritable, unless something has changed since I looked into it a few years ago.
brooklynite
(94,614 posts)MohRokTah
(15,429 posts)B2G
(9,766 posts)Do they guarantee your winnings?
They have purchased a guaranteed annuity to pay out your winnings.
But if you need something to worry about, just assume the entire national economy collapses.
B2G
(9,766 posts)hifiguy
(33,688 posts)bigwillq
(72,790 posts)odd_duck
(107 posts)so I decided to fork over $20 {voluntary tax}
Separation
(1,975 posts)I'm taking the lump sum, and then I am going to do a faithful recreation of the last 5-10 of Scarface! 😜😜😜
KingCharlemagne
(7,908 posts)doesn't add up. He says the first year's annuity payment would be $22.7 million. If one multiplies 22.7 million by 30 years, the product is approximately $662 million, not $930 million (the onetime payout) and certainly not the $1.5 billion jackpot. Am I missing something? Do the annuity payments increase each year? By my math, you should receive $50 million per year to equal $1.5 billion after 30 years.
brooklynite
(94,614 posts)KingCharlemagne
(7,908 posts)learning is a dangerous thing."
Thanks for the annotation!
A HERETIC I AM
(24,371 posts)The first will be the lowest and each successive year will be four percent higher than the previous.
There is no "lump sum" payment at the end, just the final one which will be considerably higher than the first
cherokeeprogressive
(24,853 posts)Lodestar
(2,388 posts)advisors, is all-consuming and a full time job, not to mention the toll it might take as regards relationships, etc. I honestly wouldn't want it unless I was someone who already was used to handling big money and had a lifestyle and structure in place, money managers I'd worked with over a long period of time, and some businesses, investments, etc. where much of the money could be channelled, at least initially. Otherwise
it's just overwhelming....and I really don't want a life dedicated to money management.
Uben
(7,719 posts)I was sooo happy! She only charged me $1000, so I tipped her another $1000. What a deal! And...I didn't even buy a ticket!
KamaAina
(78,249 posts)Much easier to buy the fab crib, G5, etc. with cash.
Tab
(11,093 posts)With any luck, I can post back tomorrow what I decided.
SheilaT
(23,156 posts)job of investing their money than the folks who set up the 30 year annuity certain, the payout of which INCREASES 4% every year.
It's very hard to do better than that.
Xithras
(16,191 posts)If I won $1.5 billion, my actual course of action would be straightforward. I'd start an entirely new investment fund, just for myself.
I'd look at the best performing funds in the market, real estate, and other investment vehicles. I'd find out who runs those funds. And then I'd hire them. Not the companies, but the actual rank and file people who make those funds work. I'd poach the living heck out of them. And then I'd rent a beautiful office space in some New York City skyscraper and put them to work for me. I wouldn't have "a financial advisor", but an entire team of financiers whose entire day job is based around growing that sum of money...and whose lucrative annual bonuses are directly tied to their level success. An entire team of people working 40 hours a week to turn that initial seed money into something much bigger.
Ultimately, most of the money would end up being spent on charitable causes, but I'm of the opinion that a permanent and growing investment portfolio capable of supporting many charitable causes on an ongoing basis is actually more useful than a one time cash gift from someone obliterating a billion dollar lottery prize. I'd live off of some of the growth, never touching the original seed that the fund is built upon.
SheilaT
(23,156 posts)is excellent advice. Just make sure you understand what they are doing for you.
I actually have a financial guy, and if I ever were handed a winning lottery ticket, he'd be the first person I'd call. He has done very well for me over the years. I trust him. He knows a whole lot more than I do. Did I mention he's done very well for me over the years?
It's the greedy "Fuck them, I'll take ALL the money up front because *I* can manage it better" mentality, coupled with the "What if the Powerball goes bankrupt and can't pay over time" which shows a total ignorance of how they handle the money, that makes people think they're better off taking it all. And sadly, many lottery winners wind up broke or dead in a sadly short time.
What I sincerely hope with this huge payout, is that there are at least a thousand winning tickets, so the money is spread out over many people.
hifiguy
(33,688 posts)They're worth it when you're talking about this kind of cash. Keeo a chunk to play with, say 10-20% and let the hotshot brain wizards manage the rest.
exboyfil
(17,863 posts)I don't see why you can't manage your own money with direct purchase of a variety of different government treasuries, stocks, asset classes, etc. The big concern would be diversification at all levels (asset classes, locations of investments, etc). I do not know if actively managed portfolios really outperform passive diversification when you include administration costs.
I do agree with your sentiments about not taking the annuity, the last thing I would do would be to leave it in a single "guaranteed" annuity. Until the financial crisis you would think an AIG annuity would be gold plated. Who is the guarantor? The states? an independent company?
A HERETIC I AM
(24,371 posts)They're buying securities that yield around 3 - 3 1/2%
You don't think that can be beat over thirty years?
SheilaT
(23,156 posts)by 4% each year. That's better than 3 - 3 1/2%.
A HERETIC I AM
(24,371 posts)The company that wins the bidding for the annuity structures the payment schedule such that it increases by 4% each year but that is not related to the rate of return they are getting from the securities the insurance company buys.
Goblinmonger
(22,340 posts)Even with that much money, I wouldn't want Powerball to make money on my lump sum. Spread it around to some highly recommended pros and then see who does the best with it after a year.
Sure it increases 4% every year on the annuity, but in real dollars, what you get from them over 30 years is worth less than the lump sum.
But if one isn't going to invest it and just piss it down their leg, then the annuity is the better option.
laundry_queen
(8,646 posts)in my accounting class on annuities. Basically, if you aren't a total drooling idiot who is going to blow it all, and you do plan on investing most of the money anyway with a reputable place, take the lump sum. In nearly every circumstance, you will beat the annuity easily, even with conservative investments.
DawgHouse
(4,019 posts)hifiguy
(33,688 posts)Last edited Wed Jan 13, 2016, 05:11 PM - Edit history (2)
And head for Australia, New Zealand or Canada with all deliberate speed. With that kind of cash in the bank any country will let you in if you invest a large chunk of it there.
I'd keep about 10-15% of it for myself to live out my life on and set up a foundation or two to promote leffy causes all over the world, but especially in the US. Anything that would drive the reichwingers and religulous halfwits up a wall would get a nice fat check from me. I'd also set up a school or two for Asperger's kids, donate to orchestras, cultural organizations and no-kill animal shelters.
I'd get myself a spacious place to live in one of the aforementioned countries, (I think 2500-3000 square feet would be quite sufficient) have it decorated nicely (my tastes run to Asian and Scandinavian designs), hire a chef, and a gentleman's personal gentleman to run my household and live my life reading, thinking, writing, traveling and relaxing. I already know the lawyers who would be handling everything on that end. My sole "outrageous" indulgences would be a couple of Italian sports cars and a well-stocked wine cellar.
Humanist_Activist
(7,670 posts)that.
Pay off my and my Fiancee's debts.
Set it up so my Dad and MIL will never have to worry about money or shelter for the rest of their lives, Dad can retire early.
Help my Sister and BIL out of debt and troubles, set up college funds for the children.
Buy a house for me and the SO, not a huge mansion, but something dignified, with room for a library, we are both bookworms and already own enough books to fill out said library, oh and a dedicated playroom/man cave/game room, I'm such a dork, lol.
Use some of the money as capital to start a non-profit, whose primary focus will be on helping the homeless. This charity will be focusing on two primary areas, providing essentials(food, shelter, etc.) and then, with a partnership with local health care networks, provide comprehensive healthcare, with a focus on mental health.
I figured I could hire people to manage the non-profit in a way that I'm not an expert in. I was thinking of purchasing or having built an apartment building in a decent neighborhood for the purpose of providing apartments for the homeless, a permanent address, then have food provided as well. The only condition is that they would be required to see case workers and counselors to keep the apartments. Many homeless people have difficulty transitioning to permanent addresses, I've heard stories, and not judging them, but they need some type of counseling to transition.
Another charity I was thinking of is a comprehensive child care/day care network that would be at heavily discounted based on a sliding scale of income starting at 0 dollars and probably leveling off at 50 a month based on what's affordable. I find that many people do not like getting handouts at all, but will happily accept it if they pay something, as long as its affordable for them.
I have many other ideas, but you get the idea.
Thing is, I will have more than enough money to ensure that several people close to me never have to work again, including myself, but that doesn't mean I wouldn't work, just a different sort, and rather than working to try to and struggle to pay my own bills, it will be so I can pay other's bills instead.
Lancero
(3,004 posts)You're going to be looking at yearly payouts in the millions so why pull everything, and potentially lose everything like so many other lottery winners have, when you can instead get millions per year to screw around with?
You know what the people who lost it all have in common? They thought 'yeah, I'll take it all right now and make it last longer then the lotterys investment guys ever could".
Taking the lump sum is the first step to failure.
B Calm
(28,762 posts)to someone?
brooklynite
(94,614 posts)Oneironaut
(5,506 posts)Is it because they don't account for taxes or something like that?
hifiguy
(33,688 posts)Saw a program a few years ago about some Cletus who won a massive jackpot. Buys a 20,000 square foot house, half a dozen trucks, twenty motorcycles and fills two rooms with suits of armor. The place was decorated in Early Vulgarian/Biker Bar if memory serves.
He was broke within five years. You can't fix that kind of stupidity, no way no how.
The smart thing to do is put most of the money - say 75% - into bonds, use part of it, if it's really big $$$ to start a foundation and live off the interest. Even if you blow the other 25%, the rest is beyond your immediate reach and you won't wind up back in the gutter.
underpants
(182,843 posts)A former coworker used to watch it. Yes they piss it away.
People come out of the woodworks to ask or cheat you. The best thing, a lawyer told me this, is hire a lawyer (duh) change your name and SSN number.
hifiguy
(33,688 posts)it's worth spending the money on a top flight tax jock in a big firm for this - to make the public announcement that the jackpot has been verifiably won but without disclosing your name.
underpants
(182,843 posts)And apparently scammers find the names and pull all kinds of tricks.
An example of pissing it away was a guy in West Virginia who won one of the first mega pots. Huge number at least $150M. His son went straight to drugs (I'm guessing Coke) his daughter was getting busted left and right for all kinds of things and he had a taxi take him to his adopted home - a strip club. He spent all day there with the taxi meyer running. Stuff like that. He was broke inside 10 years if not less.
Xolodno
(6,395 posts)For example, with a lawyer:
1. Create a couple of dummy companies and have its ownership hidden. But something that you can "use" (explain in a second).
2. Make one an investment firm (put your new home....and Caribbean condo, etc. in it). Yes taxes are worse on this, but you don't want your real name on Zillow and make it harder for scammers to get your address.
3. Create another firm along the lines of the work you do, that would "explain" why you have to go to Rome for "work", or Rio, or wherever from time to time, you didn't win the Lotto...you landed your dream job. My alibi? I became a consultant with this new company that was started by some old co-workers I knew and hit it big. Be sure to update your Linkedin profile, etc., cover your tracks everywhere, make everyone think you are still working.
4. Number 3 is a ruse, primarily to keep friends and family at bay. Never let them no you won the lotto, money will destroy those relationships.
5. Be modest, not extravagant. You have your dream job, you can pay for a nice bottle of wine with friends/family at a restaurant....but not everyone's dinner. You can have a few more BBQ's but go heavy with the cheap beer. Want to bring some friends on a trip...tell them due to all the points you rack up from your new company having you "go places" (or some other excuse), you get them and yourself a free hotel room (but make sure its a standard room, and if you want something nicer, upgrade only to the next level (hey free upgrade!)...you don't stay much in the room anyway)....oh and, they have to pay their own airfare. Want first class air seats? Take a different plane and complain to them about how your coach seats were bad.
6. You want extravagance? Do it with yourself and SO and NEVER show off.
underpants
(182,843 posts)underpants
(182,843 posts)That is using the 55% tax rate that this author says will be the rate.
Kaleva
(36,314 posts)steve2470
(37,457 posts)in addition to common sense steps to protect myself, I'd take the cash payout, then find the best firm to do an annuity with.
I'd rather have guaranteed financial security for me and my family, and live modestly, than risk it. That's me. Differences make the world an interesting place.
JanMichael
(24,890 posts)...hundreds of commercial properties, and buy 4 cheap condos in places we like to spend time, take one bitching vacation, buy a couple of sweet vehicles (under 20k apiece), buy one radio station, hire the meanest attorney and best cpa in the state....
then set aside 30k a year in income to supplement earned labor.
the three tickets bought are guaranteed winners according to the vape shop we got them at!
1939
(1,683 posts)Invest in AT&T, Verizon, Ford, Caterpillar, and a hundred other companies that pay 3%-plus dividends taxed at 20% (plus 3.8% for Obamacare)./ That gives you some protection from virulent inflation (like the 1970s). Only spend what you get from the dividends (after paying taxes of course).
Move to a secure area. Give nominal gifts ($15,00 or less a year) to deserving relatives.
kentauros
(29,414 posts)That is, take out the taxes before we even see the jackpot total!
That way, we don't have to figure out how much we'll be getting, or knowing how much we "lost" to taxes (unless you like torturing yourself by doing whatever math is needed.) We also don't have the mess of doing our taxes on it until later (interest, capital gains, et cetera.)
Why can't we do it that way??
steve2470
(37,457 posts)Half-joking.
kentauros
(29,414 posts)because so many blow their prizes long before they need CPAs and lawyers
Kennah
(14,276 posts)... I watched a program that profiled several lottery winners. They were all surprisingly grounded. One couple, who were probably in their mid 50s, won about $16 million. Quit their jobs, helped out their grown kids, and bought a nice home. House was certainly in a 1% neighborhood and bigger than I would care for, but it wasn't grotesque. They did their own yard work, and because of that the neighbors thought they were the landscapers. Took the neighbors several months to figure out they were the owners. Now they were friends with the neighbors.
Googling for statistics on lotteries, I find numbers that run the gamut. X percent are more happy, Y percent are unchanged, Z percent are less happy. Seems easy to bemoan the downside of wealth when one is wealthy. As for happy, we each play a huge part in our own happiness despite our net worth.
Ask lottery winners this question.
Knowing what you know now, if you could wave a magic wand, rewind your life to before you won the lottery, erasing any knowledge of it so you'd never suffer remorse, would you do it?
It is difficult to imagine many answering yes. Jack Whittaker might, but from everything I've read he blamed his granddaughter's death on her friends, not the lottery or the wads of cash he showered on her that she used to become an addict. Reading about Whittaker, I conjure the image of a white trash version of Donald Trump--a jackass with money.
I recall reading a Reader's Digest article from about 1991. My late Grandmother bought Reader's Digest, and there was always plenty to read at her home. I read about a lottery winner, from Pennsylvania I believe, who won a $1 million in 1971, and he heeded the advice of Josh Barro taking the annuity payout. This was a $50K a year payout over 20 years. The man was a state employee who quit his job at age 52, and did not return to work. Now at 72, he was broke. Yes, I get that there is a world of difference between a $1 million in 1971 (perhaps $6 million in today's dollars) and $1.5 billion. As a 48 year old state employee, if I were to win $6 million today it would change my life, but I would not quit my job. A house (not a mansion), money for the kids to go to college, helping family, and setting aside enough so that I actually CAN retire by the time public sector unions are perhaps eviscerated by the SCOTUS this year.
$1.5 billion? Methinks I'd seek the advice of an attorney as to whether I should take the lump sum or annuity payout, not a NYT writer.
Finally, quoting Gandhi, the movie, "I beg you to accept that there is no people on Earth who would not prefer their own bad government to the good government of an alien power." I was reminded of this as I considered the advice to leave your money in the hands of the market. I have to wonder if it does not bring about more good in the economy for more people in the bottom rungs of the economy for an "irresponsible lottery winner" to spend their money rather than leaving it invested.