Dear Powerball Winner: Take Our Advice and Take the Annuity

[Kennah]

108. Back before The Learning Channel became The Reality TV Network ...

... 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.