Every person has some financial problems. And, we all dream of getting a large amount of money out of nowhere that would solve all our problems. That is why so many people buy lottery tickets regularly, believing that a stroke of luck would change their lives for the better.
No matter how appealing winning a large amount of money sounds, life after winning the lottery is not that dreamy as many people believe. So many lottery winners reported losing friends, turning to vices such as gambling or alcohol, and experiencing various other problems.
According to a recent study, lottery winners don’t even experience a change in their day-to-day happiness. However, they do feel a boost in their overall life satisfaction. Robert Ostling, a lead researcher, explained that “life satisfaction” refers to how people feel about the quality of their lives, whereas “happiness” measures day-to-day feelings. “Our results suggest it is more difficult to affect happiness than life satisfaction,” Ostling further explained.
During this research, 3,362 winners of lotteries were studied from five to twenty-two years after their big win. The researchers focused on measuring the winners’ happiness, overall life satisfaction, mental health, and satisfaction with their personal finances. The research was carried out mostly with the help of several questionnaires that posed questions such as: ”All things considered, how happy would you say you are?” and “Taking all things together in your life, how satisfied would you say that you are with your life these days?”
All of us believe that winning the lottery money would somehow make us happier. And, that was the exact hypothesis the researchers used. However, the results proved to be the complete opposite. After focusing on the psychological impact of winning the lottery, researchers discovered that for those who won at least $100,000 in the lottery happiness and mental health weren’t significantly impacted.
But, there is one thing that remains true; all lottery winners did get to live in better conditions. According to the research results, winners “appear to enjoy a sustained improvement in economic conditions that are robustly detectable for well over a decade after the windfall.”
Now that you know that winning the lottery won’t necessarily make you happy (but will give you a tremendous financial boost), it’s time to find out what lottery winners have to deal with and is winning the lottery worth it?
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Ask any random person, “is winning the lottery worth it?” and their answer will be yes. What people usually think about is all the money they would be getting. However, they don’t take into account everything else that comes with the money. Here are some issues lottery winners have to deal with that you probably didn’t know about.
Claiming the Prize
Once you win the lottery, you will have to claim your prize. If you live in the United States, that means you will have to go to your state capital in order to get the money you won. For example, if you live in Missouri, you will have to travel to the Missouri Lottery Headquarters in the state capital of Jefferson City. And, you have 180 days to do so or you will lose your money.
Smaller prizes can be claimed at any regional Lottery Office. But, if you’re lucky enough to score the jackpot, you will have to go to the source.
So, if you were wondering how long does it take for a lottery winner to get their money, the answer is up to 180 days. It depends on how soon can the winner get to the headquarters.
Taxes and Paperwork
Once the winner finally arrives at the Lottery Headquarters, he will be greeted by a customer service representative. And, that is the very moment when the fun begins.
The winner’s first hours as a millionaire will be spent filling out paperwork. Every winner has to submit a Missouri Lottery claim form, a big pile of papers from the Game Accounting office, and, of course, tax forms.
Oh, did someone mention taxes? In the US, each state taxes winnings at different rates. Lottery taxes are the highest in New York, where winners must give 8.82 percent of their money back to the state. So, if you win $100 million, you will have to give almost $9 million back to the state.
Doing the Right Thing
Imagine you find out that you won $100 million. What would be your first move? Probably calling your friends and family. But, believe it or not, this is wrong.
According to Andrew Stotmann, a securities attorney who has represented lottery winners, lotto winners become “one of the most heavily targeted marks in the entire world.” So, if you ever win the lottery, the first thing you should do is gather a team of lawyers, accountants, and financial advisers.
Where to Put Their Money?
Now that you are slightly more familiar with the first few hours of a lottery winner’s life, it is time to tackle the next question – where do lottery winners put their money?
All lottery winners can choose to receive their bounty in a lump sum or through a 30-year-annuity. If you are disciplined enough, then getting a lump sum is a wise choice since you could try investing the money and earn even more. On the other hand, the annuity payments arrive with taxes already withheld, which can prevent some major headaches. Once you decide your preferred option (with the help of a financial advisor), it’s time to think where to put all that money.
Everyone’s first guess would be a bank. But, what bank? Believe it or not, behind the front doors of the world’s best-known banks are little-known private banks that are only available to high net worth individuals.
Keeping your entire fortune in a single bank account would be silly. What the majority of these high net worth individuals should do is distribute their money in the form of investments, relatively illiquid assets such as a business or real property, trust or other forms of inheritance and, of course, cash. Private banks were set up to address the wide range of services someone with a high net worth needs in order to manage larger amounts of money.
Maybe all the paperwork, taxes, and stress that come with life after winning the lottery seem like something temporary and easy to handle. However, there are still so many issues lottery winners have to deal with.
Once you read this you will truly ask yourself “is winning the lottery worth it?”.
Many lottery winners explain how their friends and family try to exploit them. Your loved ones will start turning to you for help and perhaps they won’t feel the need to return the money since you have so much already. One lottery winner shared an unusual story:
“I had one friend who told me this sob story about how behind she was on her local taxes, how they were going to take her house because she couldn’t pay. After she left, I got on my computer, looked up her tax records, and saw that she wasn’t behind. When I printed out that page and sent it to her, well, that was the end of our friendship.”
Speaking of friends, lottery winners believe that they will still be able to hang out with their old friends just like the old times. But, think about it… If you have $100 million, you’re not going to want to sit in your local bar. You’ll dream of flying to an exotic destination for the weekend. Sadly, your friends might not be able to keep up with your new lifestyle, unless, of course, you offer to pay for them.
In addition, lottery winners find it hard to resist impulse purchases. Here is one great example:
“After we won the lottery, we bought an eight-bedroom, seven-bath, 10,000-square-foot mansion because we could, and it sounded amazing. Well, now we’re selling the eight-bedroom, seven-bath mansion because it’s impractical for a family of four.”
And, if you believe that you will remain anonymous after you win the lottery, you are completely wrong. Many state laws require that you do a news conference and hold up a big check while people are taking photos of you.
The truth is, lottery winners have a lot on their plate and if they don’t handle their money properly, their life will be worse than before. Luckily, many lottery winners used their winnings to make a positive difference in their lives and their communities. Here are several lottery success stories that will inspire you to buy a ticket, despite all the burdens it might carry.
Neal Wanless was one of the poorest ranchers in Todd County, South Dakota, which is known as one of the least prosperous areas in the United States. In 2009, Neal was behind on his taxes and he didn’t have enough money to maintain his ranch. He tried earning extra cash by selling scrap metal. Then, he decided to invest $5 on a Powerball ticket and selected numbers from family members’ birth dates. The investment was worth it since Neal got $88.5 million after taxes. He used the money to continue to work his ranch and he used a part of his earnings to help others in his community.
Cynthia P. Stafford is one of the bravest women you will ever read about. Her brother was killed by a drunk driver, so she took in his five children and decided to raise them as a single mother. Besides, she had to help her father financially. In 2007, money was tight and Cynthia was struggling to pay the bills.
Since 2004, the number $112 million popped into Stafford’s head. She started practicing the law of attraction to win that amount. For example, Cynthia slept with the number on a note under her pillow, meditated on winning a $112 million jackpot, and visualized how it would feel once she won. Three years later, she walked away with $112 million. She used the money to tackle her family’s financial problems and start her own film company.
Les Robins was a high school teacher who was sad to see that kids nowadays don’t grow up doing the kinds of activities he enjoyed as a child, such as going to camp, playing sports, and enjoying the outdoors. So, when Les won a $111 million Powerball jackpot, he decided to establish his camp that would bring joy to kids. Camp Winnegator operated for over a decade and provided children a place to go in the summer where they could swim, play on the lake, ride horses, and craft. Of course, he made sure that the price for the camp was as low as possible.
As you could see, winning the lottery comes both with advantages and disadvantages. In the end, life after winning the lottery depends solely on the winner. Many people find a way to do good with their prizes, while some make the wrong choices and lose all their money. If you dream of winning the lottery, then there is no reason to avoid buying a ticket. However, be aware of all the “consequences” that come with winning a large sum of money. Also, keep in mind that buying lottery tickets should only be done for fun, not as a plan to make money or save for retirement.