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October 8, 2018
Have you ever thought about what you would do with the money from a multi-million dollar lottery win?
The odds are slim: According to PowerBall’s own assessment, the odds of winning the grand prize are roughly 1 in 292 million. That means you’re more likely to make three consecutive hole-in-ones, get struck by lightning, or be attacked by a shark than you are to win the grand prize. That doesn’t stop Americans from spending billions of dollars each year on lottery tickets.
To learn more about how Americans view the lottery — and what they would do if they won — we surveyed 5,000 people on their lottery aspirations.
Major takeaways include:
Nearly half of Americans would manage winnings themselves. 43 percent of Americans said they wouldn’t use a financial advisor to manage the money from a multi-million dollar lottery win.
After winning, most would make a big purchase within the year. Only 31 percent of Americans said they’d wait more than a year to make a big purchase after winning the lottery.
Americans prefer to use their money for others. A combined 61 percent of Americans would use the bulk of their winnings for other people, including spending the money on others, saving the money for others and donating the money to charity.
43% of Americans Wouldn’t Hire a Financial Advisor After a Major Win
Surprisingly, 43 percent of Americans reported that they’d manage the money from a lottery win themselves. This is contrary to the advice given practically across the board by financial experts and lawyers whenever the jackpot reaches an all-time high. The statistic represents a fundamental misunderstanding around the correct handling of such a windfall, which could be a reason that approximately a third of lottery winners declare bankruptcy.
Older Americans Are More Likely to Hire a Financial Advisor
Our research also found that how Americans say they’d manage a multi-million dollar lottery win also varies by age. Specifically, people are more likely to hire a financial advisor to manage the money as they age.
Americans that fall within the millennial and Gen Z age ranges (approximately 18 to 34) are the least likely to hire a financial manager in favor of managing the money themselves. This number rises at a fairly steady rate as age increases; Americans 65 and above are the most likely to hire a financial planner at 68 percent.
Men Are More Likely to Manage the Money Themselves
Gender also plays a role in how people choose to manage lottery winnings. According to our research, men are more likely than women to manage the money themselves, with 48 percent of men saying they’d prefer to handle the money on their own compared to 38 percent of women.
The Majority of Americans Would Make a Big Purchase Within the First Year
When given the choice to wait more than a year to make a big financial purchase with the winnings from a multi-million dollar lottery win the majority of Americans, approximately 69 percent opted to make a purchase at some point within the first year, with 13 percent of Americans saying they’d make a big purchase “right away.”
Spending a large amount of lottery winnings is contrary to the advice of most financial planners, who warn against falling into “sudden wealth syndrome.”
According to financial advisor Gary Scheer, lottery winners should put a “financial, accounting and legal team in place” prior to making a big purchase. This secures “reliable, predictable and guaranteed streams of income that they can never outlive.” Considering that vetting such a team and putting a plan in place could take up to six months, making a large purchase quickly isn’t advisable.
“Once the big spending begins, lottery winners rarely step back to do the long-term planning for securing their nest egg that should have taken place from the beginning,” says Scheer.
Americans Are Most Likely to Use Winnings for Others Not Themselves
When given the choices to spend the money on themselves or on other people, Americans were most likely to spend on others. Twenty-eight percent of Americans said that they’d spend the money from a lottery win on others, 18 percent said that they’d save the money for others and 15 percent said they’d donate the money to charity.
Americans are least likely to spend the money on themselves, with only 13 percent of respondents saying that would be their preferred way to use the majority of a multi-million dollar lottery win.
Younger Generations Are Least Likely to Donate Lottery Winnings to Charity
Additionally, we found that the youngest generation — those between the ages of 18 and 24 — are the least likely to donate the majority of their winnings to charity, with only 8 percent saying they’d do so. In contrast, Americans in the oldest age bracket — 65 and above — are the most likely to do so, at 21 percent.
The thought of winning a big ticket jackpot is enticing, which may be why Americans continue to buy tickets despite the odds of winning being so slim.
But considering the number of Americans who said they wouldn’t follow basic financial best practices after a win, like hiring a financial advisor and waiting to spend the big windfall, Americans may want to rethink their “what if” strategy. If not, they may risk joining the ranks of the approximately one in three lottery winners who go broke.