[Anitius Severinus Boethius]

I have often wondered why so many lottery winners go broke even after winning tens of millions of dollars at times.

The simple math is thus: By saving a mere $3 million and placing it in a realatively mediocre savings account with a major bank, say 4%, you gain in interest $10,000 a month. Even taking out 45% in taxes you end up with $5,500 a month, or $66,000 a year.

Every year.
After Taxes.

Then it hit me, if you lack the math skills that would prevent you from buying lottery tickets every week, you will not magically get the skills if you happen to actually win.

(I do love irony though, and it would have been unbelievably funny if the ticket the professor tore up had actually contained the winning numbers =))

[steelcurtain]

I have often wondered why so many lottery winners go broke even after winning tens of millions of dollars at times.

This feller and his now deceased granddaughter probably should have had a talk with you before winning the $315 million.

[HamiltonJay]

Giving someone who doesn't know how to handle money a lot of just means they'll spend that much more.

Most folks who play the lottery are poor.

Most folks are poor because they don't know how to handle what little money they do have.

Giving someone like this a lot of money all at once is just asking for a train wreck... which is almost always what happens.

[Tijeras_Slim]

My brother in law smugly told me that X% of all Lottery winners go broke in a few years.

My answer: "They all gave money to their brother in laws, I won't make that mistake."

[Joe Miner]

(I do love irony though, and it would have been unbelievably funny if the ticket the professor tore up had actually contained the winning numbers =))

The guy had a scotch tape dispenser in his pocket, just in case.

[JamesP81]

The simple math is thus: By saving a mere $3 million and placing it in a realatively mediocre savings account with a major bank, say 4%, you gain in interest $10,000 a month. Even taking out 45% in taxes you end up with $5,500 a month, or $66,000 a year.

I think that is 4% APY, which is Annual Percentage Yield. It would be 10,000 per year. And furthermore, a "mere" 3 million dollars is not that easy to save.

[JamesP81]

On second thought, 4% on 3 million yearly would be $120,000 / year before taxes which would in fact, be $10k per month.

Clearly, it is too early for me to be doing math. Or freeping for that matter.

[antiRepublicrat]

I have often wondered why so many lottery winners go broke even after winning tens of millions of dollars at times.

Because they blow it all instead of investing it, and because they choose the larger payout amount over years instead of taking the smaller amount up front and investing it.

Germany had a famous case of a guy who won lump-sum millions in their lottery -- twice! He went completely broke shortly after each win.

But the lottery isn't totally stupid as long as you play it as recreation: blow a buck on a ticket, $10 for the movies, whatever's worth it for you.

[Always Right]

Then it hit me, if you lack the math skills that would prevent you from buying lottery tickets every week, you will not magically get the skills if you happen to actually win.

People don't realize $3 million is not all that much. You can live nicely, but not ravishingly. Once you buy that $50K sports car, some jewlry, a house, give some money away to family and friends, take a trip a good chunck of the money is gone. On top of that, taxes take out about 40%, which some people don't grasps until after they see there is not all that much money in their account. A thrifty person could live very nicely off a lottery jackpot, but not many jackpot winners are thrifty. They are too busy sticking $100 in the g-strings of strippers.

[Richard Kimball]

Most people cannot get their minds around the concept of a million dollars, and see it as an endless supply of money. Buy a couple hundred thousand dollar house, a few toy cars, give some away, take a few trips, pay your taxes and it's gone.

They don't understand the concept of measuring net worth and that the trend is as important as the current worth.

[DaiHuy]

you said: "mediocre savings account with a major bank, say 4%,"

I want to know where the heck you found a bank that pays 4% interest

[pollyannaish]

In addition, I think we don't respect money we do not earn. When we have to trade away part of our life for it, it has inherent value. When it's handed to us, it doesn't mean much.

Add that to poor math skills and you have disaster in the making.

[antaresequity]

If I won the lottery...

I would move the funds to an offshore account on say...the island of Nevius...invest the money in stable emerging market debt getting a slightly better return.

I would order up one Debit card for the account and not pay a single dime in taxes...

By the way...you could withdraw 66k a year from 3 million and it would last you 45.45 years to consume...