$10m dollars--more than enough?

[optimusprime]

So I was talking to some colleagues and we were speculating about large financial windfalls from certain events (e.g. inheritance, legal settlement, lottery, etc).  I said something like "well if $10m falls in your lap you won't show up to work again" and basically the whole group said I was crazy and that $10m wouldn't be enough to hang it up. 

This was a range of people mostly in their 30's and none of them make millions--it would take a lifetime of work or more for any of them to actually accumulate $10m the old fashioned way.  So I was pretty surprised.  Should I have been?  Do most people really think you need tens of millions of dollars to retire?  Is there any circumstance where that would be true?  In my mind a $10m windfall is plenty to support a great lifestyle no matter your situation (young, old, large family, small family, HCOL, LCOL)... but am I wrong and using old math?  I'd love any reactions in terms of both that and whether most people really think this way (and why)...

[nereo]

Most of the general public has zero concept of what would be “enough” for retirement with no guaranteed pension or SS and a potential half century of living on your investments. They hear about wealthy billionaires and 9-figure power all jackpots  and sports figures with $100MM+ contracts and actors getting paid $20MM for a single movie and think that a onetime payment of $10MM is much smaller so how can it be enough? Especially when they are in the news having gone bankrupt

To be clear, $10MM is generational wealth as long as you aren’t irresponsible with spending. It’s also true that there’s almost no amount of money that can’t be squandered.

$10MM will let you spend a quarter million dollars annually with the most likely scenario that, after thirty years, you will have even more money. That includes bumping it up each and every year to match inflation. It’s more spending money than a wage-earning couple earning $400,000 annually have after paying taxes.

[theninthwall]

It’s no surprise people don’t understand. My Facebook feed is filled with ‘news’ stories about how much you need to retire in ‘X’ city. The studies are often put out by the same company, with the intention of getting easy press. So, they make claims like needing $3m because the cost of living ‘comfortably’ for a couple is $100k a year and retirement is 30 years. Of course the comment section gets riled up with outrage about how retirement is impossible, the news outlet gets engagement, the company that released the study gets PR and the circle goes on.

[2sk22]

JL Collins says you only need $2.5M :-) https://youtu.be/eikbQPldhPY?si=RB8rfr_ol99925e7

[Metalcat]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

[reeshau]

To be clear, $10MM is generational wealth as long as you aren’t irresponsible with spending. It’s also true that there’s almost no amount of money that can’t be squandered.

Old joke:

"What's the easiest way to make a small fortune?"

"Start with a large fortune."

[Ron Scott]

I have a different perspective. It depends on what your definition of “enough” is.

If someone has set life goals for themselves that include achievements in their work environment and hadn’t reached them yet, $10M is not enough to stop working for those achievements.

If someone has achieved everything they wanted in their work, $10M is probably enough to hang it up—IF they have a path to satisfaction that does not involve working

Life is about so much more than money and leisure time. And just accumulating “enough money” to leave a job that offers opportunities beyond a paycheck seems foolish to me.

[Chris Pascale]

$10 million may make them want to live like they have much more. They think of buying a big house and too many cars; maybe a boat. They treat everyone they know (or burn bridges).

They don't think about it like, that's xx number of years of work, or at current CD rates, I'd make _________.

As for what's enough, though, it's relative.

[JupiterGreen]

JL Collins says you only need $2.5M :-) https://youtu.be/eikbQPldhPY?si=RB8rfr_ol99925e7

I hadn't seen this, it's perfect thanks for the link!

[nereo]

I have a different perspective. It depends on what your definition of “enough” is.

If someone has set life goals for themselves that include achievements in their work environment and hadn’t reached them yet, $10M is not enough to stop working for those achievements.

If someone has achieved everything they wanted in their work, $10M is probably enough to hang it up—IF they have a path to satisfaction that does not involve working

Life is about so much more than money and leisure time. And just accumulating “enough money” to leave a job that offers opportunities beyond a paycheck seems foolish to me.

Those are two completely different questions though.

"Do you have enough $ to stop working" ≠ "have you achieved everything you wanted to in your work"

You can achieve the former long before latter (and vice versa).  Many on here have: check out SWAMI (first referenced here, discussion here and here,  )

[GilesMM]

Years ago the conventional wisdom in the silicon valley was that if your startup IPO was successful you could retire if the figure was over $40 million.  This assumed $10 million for the tax man, $10 million for some decent real estate (these days that is a 4 bedroom house in Atherton), and $20 million in walking around money.  I guess with inflation it could be a lot more these days.

[Turtle]

$10 million from a lottery win would be different from a settlement or inheritance, at least in my case.  Settlement implies some sort of injury where the extra money is necessary for medical bills and accommodations.  Inheritance means the other family was likely to have received their own.

$10 million lottery win I would seriously contemplate making it into a joint ticket with specific family members, so it wouldn't be 10 million.  Plus I'd also be doing 529s for the younger generation and possibly gifts to specific extended family which would make a dent also.

Taxes would take up quite a bit of it as well, so I could see a younger lottery winner maybe not wanting to say they'd never work again.  If they live in a HCOL area, that would be especially true.  But they certainly could afford to go back to school for their dream job, or take a pay cut for a job with more fulfillment/less stress.

[Laura33]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

[Tigerpine]

I'm assuming this discussion is about a pre-tax lump sum amount.  In that case, after income tax, we're talking about $6M if I'm not mistaken.

Most people seem to think of money in terms of spending rather than in terms of having.  That was certainly the case for me when I was younger.  Add to that the fact that most people have never had anywhere close to that amount of money, and what happens is that people can't fathom what it would actually be like to have that kind of money and live sustainably off of it.

People are used to having a trickle of cash to fund their lifestyles and have a hard time imagining any other way to live.  If your mindset is that to have money is to spend money, you will never imagine you can ever have enough.

[Morning Glory]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

[Tasse]

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

Heck, I struggled with one pill once per day. That's why I got an IUD ;)

$10M is my "having any more money than this is just idiotic, time to start giving massive amounts away" number.

[bacchi]

I'm assuming this discussion is about a pre-tax lump sum amount.  In that case, after income tax, we're talking about $6M if I'm not mistaken.

Most people seem to think of money in terms of spending rather than in terms of having.  That was certainly the case for me when I was younger.  Add to that the fact that most people have never had anywhere close to that amount of money, and what happens is that people can't fathom what it would actually be like to have that kind of money and live sustainably off of it.

People are used to having a trickle of cash to fund their lifestyles and have a hard time imagining any other way to live.  If your mindset is that to have money is to spend money, you will never imagine you can ever have enough.

Exactly.

Their thinking process is:

1) I would buy a house for $3M, leaving me $3M.
2) I would then buy a 2nd flat/home in Paris/Hawaii/wherever for $1M, leaving me $2M.
3) I would then buy a $250k Porsche/Ferrari/Bentley, and a $100k daily driver garaged at each location, leaving me $1.55M.
4) Who can afford to maintain all that with just $1.55M?

And what @nereo mentioned above. If your news feed is all about sports stars making $100M over 10 years, and Bezos buying 2-3 legit mansions and bulldozing them for a mega-mansion, $10M is nothing.

[dividendman]

I'm assuming this discussion is about a pre-tax lump sum amount.  In that case, after income tax, we're talking about $6M if I'm not mistaken.

Most people seem to think of money in terms of spending rather than in terms of having.  That was certainly the case for me when I was younger.  Add to that the fact that most people have never had anywhere close to that amount of money, and what happens is that people can't fathom what it would actually be like to have that kind of money and live sustainably off of it.

People are used to having a trickle of cash to fund their lifestyles and have a hard time imagining any other way to live.  If your mindset is that to have money is to spend money, you will never imagine you can ever have enough.

Exactly.

Their thinking process is:

1) I would buy a house for $3M, leaving me $3M.
2) I would then buy a 2nd flat/home in Paris/Hawaii/wherever for $1M, leaving me $2M.
3) I would then buy a $250k Porsche/Ferrari/Bentley, and a $100k daily driver garaged at each location, leaving me $1.55M.
4) Who can afford to maintain all that with just $1.55M?

And what @nereo mentioned above. If your news feed is all about sports stars making $100M over 10 years, and Bezos buying 2-3 legit mansions and bulldozing them for a mega-mansion, $10M is nothing.

This is the main point. Everything should be considered as a % of net worth. The rich folks people see on TV are spending waaaaaaaaaaaaay less than average folks as a % of NW on anything.

See that $100k watch Bezos has? I only have a $1k iWatch... but wait, my net worth is $100k... so that watch is 1% of my NW. Bezos has a NW of ~$200B... so his watch is 0.005% of his net worth. He is spending 200 TIMES less than me on a relative basis.

Same thing for cars and shoes as shit. LeBron James may have $20k Nike's... that doesn't mean you should get $500 Nike's.

[Metalcat]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

I was always amazed and impressed when someone took the antibiotics I prescribed properly. Like "WOOOOOW" *golf claps*

[Sibley]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

I was always amazed and impressed when someone took the antibiotics I prescribed properly. Like "WOOOOOW" *golf claps*

Unfortunately for those of us who ARE capable and reliable about taking medication, we still get treated like the idiots who aren't. I get it. But, once proven, could you make a note in the file that I'm competent? Please?

[Morning Glory]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

I was always amazed and impressed when someone took the antibiotics I prescribed properly. Like "WOOOOOW" *golf claps*

Unfortunately for those of us who ARE capable and reliable about taking medication, we still get treated like the idiots who aren't. I get it. But, once proven, could you make a note in the file that I'm competent? Please?

Nope everyone gets the same pamphlet which is written in the second person at an eighth grade reading level. The same copy is available on the hospital website. I had a student try to plagiarize it by pasting it right into her paper once and was able to tell exactly where it came from.

[Metalcat]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

I was always amazed and impressed when someone took the antibiotics I prescribed properly. Like "WOOOOOW" *golf claps*

Unfortunately for those of us who ARE capable and reliable about taking medication, we still get treated like the idiots who aren't. I get it. But, once proven, could you make a note in the file that I'm competent? Please?

Noooope. We learn the hard way that competence isn't consistent.

You can't trust anyone to consistently take their pills or consistently pay their bills. The most reasonable-seeming people will do the most astoundingly irresponsible things out of fucking nowhere.

[PhilB]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I believe it. I remember hearing a presentation about health literacy once where they said something like half the population can't follow the direction "take two pills, twice per day"

I was always amazed and impressed when someone took the antibiotics I prescribed properly. Like "WOOOOOW" *golf claps*

Unfortunately for those of us who ARE capable and reliable about taking medication, we still get treated like the idiots who aren't. I get it. But, once proven, could you make a note in the file that I'm competent? Please?

Noooope. We learn the hard way that competence isn't consistent.

You can't trust anyone to consistently take their pills or consistently pay their bills. The most reasonable-seeming people will do the most astoundingly irresponsible things out of fucking nowhere.

For years I had to take a drug with the very simple equation 'without this wonder drug you will die.'  I was gobsmacked by the research showing that most of the treatment failures were from people failing to take the drug regularly.  Facepalm.

[Metalcat]

For years I had to take a drug with the very simple equation 'without this wonder drug you will die.'  I was gobsmacked by the research showing that most of the treatment failures were from people failing to take the drug regularly.  Facepalm.

Exactly. I worked in a combination of healthcare and personal finance, you can't imagine the foolishness I've seen.

[nereo]

For years I had to take a drug with the very simple equation 'without this wonder drug you will die.'  I was gobsmacked by the research showing that most of the treatment failures were from people failing to take the drug regularly.  Facepalm.

Exactly. I worked in a combination of healthcare and personal finance, you can't imagine the foolishness I've seen.

It’s equally baffling to me how people with chronic conditions stop taking their meds “because they started feeling better” - only to be surprised when their condition returned and became much harder to treat.

You “feel better” because of the medicine. Not taking your meds means you stop feeling better.

We go through this with my Uncle every 6 months or so.

[partgypsy]

Funny the guy I'm seeing i was joking about how I missed the recent big lottery, but will but when the pot goes up again. We talked about hypotheticals, and I said, if I won a million clear, I'd stop working. And he said wow that's crazy that's no where near enough to stop working. For him it would be 10 million. So, I dk if I'm the foolish one or not. Most likely my ideal would be if that happened a year sabbatical and then work pt 4 years, as I am more productive when I have a structure.

[eyesonthehorizon]

... he said wow that's crazy that's no where near enough to stop working. For him it would be 10 million. So, I dk if I'm the foolish one or not. ...

This comes back to the OP issue, IMO - people are not in any way accustomed to thinking of money in terms of invested capital, & so think large sums are just a pot of ambiguously limited spending-time at worst, or more usually, a steadily depleting balance. On the lower end of literacy you get people who forget there are ongoing costs to things you own, like taxes & mainenance; on the higher end of "average" you run into people who don't consider ROR but do recall inflation exists, who are thus even more likely to produce astronomical numbers.

This shit is simply not taught in most schools. With interest rates so low since 1990, there was little practical education of the concept to be had in many younger people's memory either, even if they were savers.

Whether you think the conventional expectations of returns are accurate or not, you have crossed the hurdle of imagining that there could be a return on capital, which it's very likely this other person has not.

[curious_george]

Nothing is ever enough for some people.

They chase money and success until the day they die, never realizing the effects their own desire has on their life, and never being able to really, truly let it go and arrive at some sort of peaceful existence with the world.

A lot of things are like this. Chasing money, love, friends, status, success, knowledge, women, men. Running from their insecurities in life...

At any time one can simply let it all go and stop and accept their life for what it is. One can simply stop and accept the happiness of existence.

But noooo - everyone has to make things complicated.

[johndoe]

This is laughable to me because the VAST majority of people will never earn anything close to $10M over the course of their LIVES (much less retain it)!  So how in the world do they think people have historically survived in retirement?  An extremely thorough Google search suggests the average American earns $1.7M over a lifetime.

[jeninco]

Having worked in personal finance, I can confidently say that the majority of people's personal finance knowledge ends at "well my dad says."

And their ability to math ended at arithmetic worksheets.  I wonder what answers you would have gotten if you'd framed it as "$400K/yr for life." (or $350K, or whatever).

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.  These are smart people who know about personal finance and the 4% rule -- they just never thought to turn it around that way, because "math" is at most a tip you calculate at a restaurant, not a word problem that is, you know, useful in your actual life.

I was low-key amazed when a professor from the Department of Applied Mathematics mentioned in passing that if they raised $25K in a named scholarship, that meant they'd be able to give out $1000/year.  I was sitting in the audience and nodding, but the other students and grads around me looked mildly confused. Seriously, folks? Never heard of the 4% rule, or you just can't calculate it backwards? (Yeah, we contributed to the scholarship: the person it was named for was a classmate of both of ours, who died early from a heart attack that was most likely caused by childhood poverty. A scholarship in his name, for students like him, is an awesome remembrance.)

[lifeisshort123]

If I were given 5 million dollars I would retire today... Even if I had to pay tax on it it would still leave me with 2.5 million or so... things would work out just fine...

[partgypsy]

I would def prefer 2 mil. But I think I could make a mil work. Again, planning on retiring in 5 years where I will get a pension +soc security alone will cover 50% of current income (not counting money in retirement savings).
I do have to admit, once people get into that territory, they want money not just for themselves, but to help out family. And that can get expensive fast.

[Ron Scott]

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.

I was low-key amazed when a professor from the Department of Applied Mathematics mentioned in passing that if they raised $25K in a named scholarship, that meant they'd be able to give out $1000/year.  I was sitting in the audience and nodding, but the other students and grads around me looked mildly confused. Seriously, folks? Never heard of the 4% rule, or you just can't calculate it backwards?

I’m confused.

A) When did the Trinity 4% rule morph from 30 years to forever?
B) How can you use mathematics to work it backward from 25X to infinite annual withdrawals without discussing hypothetical investment assumptions?

[seattlecyclone]

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.

I was low-key amazed when a professor from the Department of Applied Mathematics mentioned in passing that if they raised $25K in a named scholarship, that meant they'd be able to give out $1000/year.  I was sitting in the audience and nodding, but the other students and grads around me looked mildly confused. Seriously, folks? Never heard of the 4% rule, or you just can't calculate it backwards?

I’m confused.

A) When did the Trinity 4% rule morph from 30 years to forever?

Due to the way exponential growth works, 30 years is close enough to "forever" that the amount of money you need for the two time horizons is practically identical. The number of historical 30-year periods where the person withdrawing 4% would have ended up with less than they started with is relatively small. Bump it down to 3% and it's practically nil.

Also in terms of a university endowment they don't have to worry too much about whether a particular donor is contributing in one of the very small number of years where a 4% withdrawal would draw down to zero in 30 years. They can promise a perpetual scholarship in exchange for a given donation, knowing that most of the time the donation will return much more than the amount of the annual scholarship over the long run. They can use this surplus to more than make up for any shortfall from donations made in years with a worse immediate sequence of returns.

[vand]

Gotta be Ten, cos...

[ixtap]

I feel like $10M is the new $1M: it just sounds like it should be enough and you don't have to know what things actually cost. I was recently informed that our $80k budget is limiting and pathetic by someone who wants $1M instead.

[Ron Scott]

I can't tell you the number of times I've mentioned something like "so if I want to know whether I can afford something forever, I just multiply by 25, and that's how much extra I need to saved," and people look like I just dropped E=MC² on them.

I was low-key amazed when a professor from the Department of Applied Mathematics mentioned in passing that if they raised $25K in a named scholarship, that meant they'd be able to give out $1000/year.  I was sitting in the audience and nodding, but the other students and grads around me looked mildly confused. Seriously, folks? Never heard of the 4% rule, or you just can't calculate it backwards?

I’m confused.

A) When did the Trinity 4% rule morph from 30 years to forever?

Due to the way exponential growth works, 30 years is close enough to "forever" that the amount of money you need for the two time horizons is practically identical. The number of historical 30-year periods where the person withdrawing 4% would have ended up with less than they started with is relatively small. Bump it down to 3% and it's practically nil.

Also in terms of a university endowment they don't have to worry too much about whether a particular donor is contributing in one of the very small number of years where a 4% withdrawal would draw down to zero in 30 years. They can promise a perpetual scholarship in exchange for a given donation, knowing that most of the time the donation will return much more than the amount of the annual scholarship over the long run. They can use this surplus to more than make up for any shortfall from donations made in years with a worse immediate sequence of returns.

Yeah, I kinda glossed over the non-profit/university game here and agree it does make sense. Plus, they’re not really betting the house on it like a retiree is.

I’m not a believer however in the market being able to fund these distributions over long periods of time, 30-years for example. Too many variables.

[Ron Scott]

Gotta be Ten, cos...

What a great show!

https://www.tiktok.com/@teeveegeek/video/7213768621552815406?lang=en

$5…? Sucks.

[lifeisshort123]

Many nonprofits rely on 5% as a healthy draw number.  It is understandable why individuals might not want to get that chancy and risky with their numbers, especially as a baseline.  But for a university, 5% tends to be a healthy assumption.

[reeshau]

Many nonprofits rely on 5% as a healthy draw number.  It is understandable why individuals might not want to get that chancy and risky with their numbers, especially as a baseline.  But for a university, 5% tends to be a healthy assumption.

Universities also continue to get money coming into endowments.

[NorthernIkigai]

Playing the weekly lottery is my guilty pleasure. It's 1.5 € a week, and sometimes I win 2 or 5 or even 20 €, so it's a hobby that costs me about 50 € annually.

The pot always starts out as 1 M€, and then grows if no one gets the numbers completely right that week. When it grows to 6--10 M€, people get excited and start talking about it. I'm always thinking: Hey, most people I know wouldn't be satisfied with winning 1--2 M€, but I would (considering the savings we already have), so please let it be me one of those weeks with lower amounts.

Not that I'm mentally ready to FIRE yet. But I'd give myself a year to get used to the idea and get my ducks in a row after I win.

[nereo]

The pot always starts out as 1 M€, and then grows if no one gets the numbers completely right that week. When it grows to 6--10 M€, people get excited and start talking about it. I'm always thinking: Hey, most people I know wouldn't be satisfied with winning 1--2 M€, but I would (considering the savings we already have), so please let it be me one of those weeks with lower amounts.

There’s a similar, bizarre behavior I’ve noticed among coworkers who play the lottery. When the jackpot is absurdly large - say over $200MM - they get excited and buy extra tickets. By comparison, there are times when the payout is “only” $10-20MM and it’s like it’s not worth the trouble. I’ve literally heard people say stuff like “well I was getting my coffee this morning and saw todays jackpot was only $17 million so I just thought “nah and didn’t buy a ticket.”

Even after the sizeable tax payment, that’s roughly 5x more than they’ll earn in their entire 40+ year working career.

[bananas]

This thread has me thinking that it could be fascinating to see what happens when an average person wins the lottery. Like, I'm surprised Netflix hasn't put out a show like this yet -- find someone who just won a giant Powerball jackpot, and send in cameras to record their thought processes and decisions on what to buy.

[NorthernIkigai]

This thread has me thinking that it could be fascinating to see what happens when an average person wins the lottery. Like, I'm surprised Netflix hasn't put out a show like this yet -- find someone who just won a giant Powerball jackpot, and send in cameras to record their thought processes and decisions on what to buy.

There's been plenty of coverage like that in the UK press, at least a few years ago. It wasn't pretty. Usually, the people who want to air their business in the press and who the press want to cover are the one who end up divorced, probably addicted, maybe even in jail, and mostly broke after a few years. The press and the public love a rags to riches story but it's unlikely someone in that situation would be able to be strategic and measured about their new situation in life.

In my country, no one ever goes to (nor is outed in) the press: People usually stay at their jobs at least for a while, update their cars, help out any adult children with something sensible like buying a home, and definitely never breath a word about it to anyone. The lottery organization interviewed one family who said "the only real difference is that we don't play what would you do if you won the lottery? anymore during long car journeys". Yay, party on!

DS and I had this discussion just a few days ago: He asked me what I'd do if I won 100 M€ (although I never play those big lotteries). I said I'd research what the best way of helping humans and nature would be, and put 95 M€ into that. Not based on "my own research" but something with a track record, like what Warren Buffet did with the Gates Foundation. DS has recently said he'd buy all of Africa and plant lemon trees all over it. I admire his interest in gardening but am somewhat worried about the colonialist streak.

[reeshau]

The pot always starts out as 1 M€, and then grows if no one gets the numbers completely right that week. When it grows to 6--10 M€, people get excited and start talking about it. I'm always thinking: Hey, most people I know wouldn't be satisfied with winning 1--2 M€, but I would (considering the savings we already have), so please let it be me one of those weeks with lower amounts.

There’s a similar, bizarre behavior I’ve noticed among coworkers who play the lottery. When the jackpot is absurdly large - say over $200MM - they get excited and buy extra tickets. By comparison, there are times when the payout is “only” $10-20MM and it’s like it’s not worth the trouble. I’ve literally heard people say stuff like “well I was getting my coffee this morning and saw todays jackpot was only $17 million so I just thought “nah and didn’t buy a ticket.”

Even after the sizeable tax payment, that’s roughly 5x more than they’ll earn in their entire 40+ year working career.

I doubt they are computing the odds, but that's actually closer to rational behavior than playing every time.  If the odds are 1:100,000,000 or more, then the longer you wait, the better you are technically doing.  Of course, nobody can play a jackpot lottery enough times to prove out the statistics; but the instinct isn't wrong.

[Metalcat]

This thread has me thinking that it could be fascinating to see what happens when an average person wins the lottery. Like, I'm surprised Netflix hasn't put out a show like this yet -- find someone who just won a giant Powerball jackpot, and send in cameras to record their thought processes and decisions on what to buy.

I've seen many shows that explore exactly this over the years, the outcomes are never good. Of course, there's sampling bias because the shows are looking to profile the lottery winners who ended up with nothing.

Although it's been long "common knowledge" that lottery winners end up broke, with a common stat being that 70% end up bankrupt within a few years, this stat is actually entirely made up.

It's not well researched and "lottery winner" is a huge category to study ranging from folks who win the equivalent of half their annual salary to folks who win 8-9 figures.

But a quick Google and scan of articles shows that research from Europe, where winnings tend to be modest, work out just fine because people stay in their jobs and generally just continue on whatever path they were on financially.

In the same theme, winning the lottery doesn't change people's projected financial outcomes. If they were on the path to bankruptcy before winning, that outcome just gets delayed.

Again, a lot of these findings are for relatively modest winnings because the vast majority of lottery winners, the prizes aren't "retire forever" levels of money.  Where I live, the average lottery winner is getting 42K, that's less than half of the average inheritance.

These are virtually meaningless averages, but my point is that most of the data out there isn't about the impacts of huge, life-altering sums.

But if you look to "sudden wealth syndrome" you might find more specific info on people who specifically gain large sums of money quickly.

[Ron Scott]

This thread has me thinking that it could be fascinating to see what happens when an average person wins the lottery. Like, I'm surprised Netflix hasn't put out a show like this yet -- find someone who just won a giant Powerball jackpot, and send in cameras to record their thought processes and decisions on what to buy.

There have been a number of studies on this for Americans. The outcomes aren’t pretty unfortunately.

Many go bankrupt within a few years as big-ticket impulse buys and family give-aways consume their portfolio. Quite a few leave their jobs and find themselves aimless. Relationships are often frayed.

There is a difference between those who have developed an understanding of how to manage wealth and those with sudden riches who are completely unprepared. Being wealthy is more about intelligent asset management than buying lots of stuff…and many lottery winners learn this after the fact.

[Laura33]

There is a difference between those who have developed an understanding of how to manage wealth and those with sudden riches who are completely unprepared. Being wealthy is more about intelligent asset management than buying lots of stuff…and many lottery winners learn this after the fact.

I'd take it a step further.  The lottery is a tax on people who are bad at math.*  Therefore, lottery winners will be disproportionately populated with people who don't have the basic skills or understanding of math and finances to manage a big influx of money -- particularly where the sums sound big (like $1M) but aren't the kind of thing that will provide life-long security unless managed carefully.


*Yeah, I admit, I play it myself once in a while.  My logical brain seems to be locked in eternal combat with the pull of magical thinking.  But I can also afford a few bucks here and there -- I call it my stupidity tax, roll my eyes at myself, and buy a ticket. 

[Arbitrage]

Noooope. We learn the hard way that competence isn't consistent.

You can't trust anyone to consistently take their pills or consistently pay their bills. The most reasonable-seeming people will do the most astoundingly irresponsible things out of fucking nowhere.

Nothing opened my eyes to the idiocy of the general populace more than my season working as a ski lift operator.  The frequency, and inventiveness, of the ways people would totally botch the simple task of:

1. Wait at the clearly marked line for the previous chair to pass by
2. Shuffle forward to the other clearly marked line
3. Sit down on chair when it approaches

I get that beginners will have trouble with it, and that snowboarders can't shuffle as easily as skiers.  This went so far beyond that, day after day, chair after chair.  Just inability to pay the slightest bit of attention, or to follow the most simple directions.  I suppose that dealing with the Keystone Cops all day broke up the monotony of the job.

[GilesMM]

Noooope. We learn the hard way that competence isn't consistent.

You can't trust anyone to consistently take their pills or consistently pay their bills. The most reasonable-seeming people will do the most astoundingly irresponsible things out of fucking nowhere.

Nothing opened my eyes to the idiocy of the general populace more than my season working as a ski lift operator.  The frequency, and inventiveness, of the ways people would totally botch the simple task of:

1. Wait at the clearly marked line for the previous chair to pass by
2. Shuffle forward to the other clearly marked line
3. Sit down on chair when it approaches

I get that beginners will have trouble with it, and that snowboarders can't shuffle as easily as skiers.  This went so far beyond that, day after day, chair after chair.  Just inability to pay the slightest bit of attention, or to follow the most simple directions.  I suppose that dealing with the Keystone Cops all day broke up the monotony of the job.

Often those who fall are newer to skiing, less confident, less proficient with skis/board/poles and unsure about the lift.  Once they ride a few times most get the hang of it.