What steps should take to maximize your lottery winnings and protect yourself from scams and reckless spending?
Buying a lottery ticket is not the savviest wealth creation strategy. but America is gripped by Powerball fever. Your odds of winning are nil, but what if you did? What steps should you take to maximize your winnings and protect yourself from scams and reckless spending?
The Powerball jackpot has grown to an unprecedented $550 million and is likely to surge even higher as star-crossed lottery players are compelled to purchase last-minute tickets. “Typically, 60 percent of sales occur the last day,” a lottery official told USA Today. Ticket sales are expected to average 6.3 million an hour on Wednesday.
Seriously, though, don’t get your hopes up. The odds of matching the six Powerball numbers are 1 in 175 million. You have a better chance of being struck by lightning in your lifetime. Or making consecutive holes in one on a par-3 hole. Or being attacked by a shark.
But just for fun, let’s say you do win. Before you get carried away in fantasizing how you can spend a half billion dollars, experts suggest you do your due diligence to avoid becoming one of those tragic statistics of former winners who became bankrupt after blowing multi-million dollar fortunes.
That wouldn’t happen to you, you insist. Well here are steps to take to ensure that it doesn’t.
· First, sign the back of the ticket to prevent anyone from claiming your jackpot should you misplace or lose the ticket. That’s another thing; DON’T MISPLACE THE TICKET. Make a photocopy and then secure it in a safe deposit box.
· Do not update your Facebook status to “lottery winner,” lest you be deluged with phone calls from family, friends, former friends, coworkers, former coworkers, and enterprising scoundrels. Many experts advise changing your address and to an unlisted phone number. If your state allows it, collect the jackpot anonymously.
· Your first phone call should probably be to a financial planner. According to a Millionaire Corner wealth level study of households with a net worth of at least $25 million, 42 percent of investors were introduced to their advisor by a friend or family member. But again, you might keep it on the downlow for now on why you are looking for an advisor.
· Decide whether you want to take your winnings as a “lump-sum” or as annual payment spread out over the decades. Beyond the tax implications, a financial advisor will go over further pros and cons of each option (With the former, you are prey to reckless spending; once it goes, it’s gone. With the latter, your access to your winnings is limited, and if your lottery organization folds, so do your outstanding payments).
David Quilty, writing on moneycrashers.com, offers these invaluable suggestions for freshly minted lottery winners: Pay off debt; start a rainy day/emergency fund; save for retirement; start a college fund; make charitable contributions; learn to say no to those come calling with their hands out.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.