Published: 14.08.2019, 12:54
2 min read
Every person who takes part in lottery activities harbors a silent desire of winning the windfall in their lifetime. Many people cannot stop fantasizing their new status after winning lotteries. Some gamers keep anticipating achieving their dream and fighting financial issues to oblivion. However, a few gamblers do not reckon that it is nearly three times easier to win an Olympic medal than to bag millions in lotteries. Nevertheless, some of the players do win a lot. However, most lottery winners lose their money faster than they get it.
The reality of winning a lottery is almost as tough as becoming the president. Even if you are fortunate enough to be a landmark winner of multi-million dollars, life will still have adequate challenges. One study established that a lottery winner is likely to be declared bankrupt between to 3-5 years than an ordinary American. Many people wonder how life could be still incomplete even after clinching the fancied lottery. Why does this happen?
Why Lottery Winners Lose Their Money?
The first scenario is that you won’t receive the full amount of lottery at once. For instance, if the lottery win is $1 billion, you’ll end up bagging slightly higher than half of the prize. You could receive up to $ 565 million lump-sum payment as you wait for the rest or subscribe to weekly pay for thirty years.
The other headache is the tax. Upon receiving your lump sum boom in the US, the federal government will be punctual to claim $165 million. It can only get worse when you are a resident of states like Texas and Florida, which will tax you even more. Other countries might tax up to 50% of the total sum.
Coupled with excessive taxation, the issue of handling money is another massive huddle for the lottery’s champions. According to a report that three economists established in 2001, winners of lotteries are spendthrift and can only save up to 16 cents in each dollar. Bruce Sacerdote, Guido Imbens, and Donald Rubin noted in their study that fortune winners could only postpone financial woes if they don’t save or invest meaningfully.
With the life expectancy in the US surging to nearly 80 years, it is practically difficult to remain wealthy for forty years. It’s estimated that most lottery winners are aged between 30-39 years. This age group is at more risk of spending money on luxuries and celebrity lifestyle.
Joe Correnti, who is a senior vice president at Scottrade, thinks that lottery winners “react too emotionally” after winning money since they have no plan in place. Bankrate report advises the lottery conquerors to prioritize the daily need for money, insurance, and emergencies.
