How the winner could spend Powerball winnings

[RosieTR]

http://www.cbsnews.com/news/what-can-the-800-million-powerball-jackpot-buy/

The conclusion of the article is the clincher. How is it different to decide between, say, a nice dinner out vs a new pair of nice shoes, and a luxury apartment in New York City vs a private jet? The scale is different but it's still choices, you still wouldn't have enough money to cover insatiable wants, if insatiable wants is what you suffer from.

[nereo]

I was just about to post a similar article from the Washington Post (linked below).

Here's the paragraph that jumped out at me (emphasis mine):

After investing that $350 million in a conservative portfolio that earns an average of 3 percent a year, the move could generate a steady cash flow of about $10.5 million a year. (And that’s without spending down any of the actual prize money.) For the typical worker, that would be enough money to cover the bills, buy a nice car, offer some financial support to family and friends, and still indulge in some nice meals and a few vacations.

Wait... what?  10.5MM per year in perpetuity is enough to 'cover the bills, buy a nice car...and still indulge in ...a few vacations"??  That makes it sound like the kind of budget any doctor or lawyer might have.
This is $200,000 per week folks.  $28k per day.  After taxes. Forever. 

The article goes on to warn against investing too conservatively [in government bonds] because inflation may eat away at the principle.  While technically true, I think the analysis forgets that it's $350MM post-tax.  Even loosing 3%/year to inflation for 40 consecutive years the person would still have over $100MM.

sheesh.
Link to the WaPo article: https://www.washingtonpost.com/news/get-there/wp/2016/01/08/how-not-to-squander-the-800-million-powerball-jackpot/

[WildJager]

In theory, they should be able to quit their jobs and never have to work another day in their lives.

Lol

[elaine amj]

I had to follow through on the link on the page: http://www.cbsnews.com/pictures/luck-gone-bad-lottery-winners-who-lost-it-it-all/

I'm a sucker for stories about lottery crash and burns. It just amazes me how people can fritter away a boatload of money. In this link though, it appears winning the lottery is a hazardous occupation - most were murdered.

[gimp]

Not gonna lie, I would probably indulge in a few fancy meals a month - after carefully checking my account balance, of course, to make sure I could afford it. Can't be too careful, you know. Going out for $25 sushi ain't cheap.

[fattest_foot]

Winning that much instantly makes you one of the richest people on the planet.

...who apparently can only afford a few vacations and maybe a new car.

I don't know how the rest of us even survive.

[Papa Mustache]

Are the winners REQUIRED to publicize who they are?

If I won the lottery (aka if I ever bought lottery tickets) - I wouldn't tell anyone but my wife.

I'd start searching for a way to get all my relatives into a comfortable no-debt position somehow. If figure at least some of them would turn very spendy-pants about ten seconds after the cash touched their palm. The rest would be okay I think.

Money seems to poison some people's lives. I don't know if the extended family could handle it or not.

I'm sure I'd have "new" relatives coming out of the wood work to reconnect to me (and my bank account).

I'm sure that at least for a period of time we'd need to move away from our town for anonymity. Some sort of hobby business to account for our wealth. Even if it broke even at least I would never need to mention the topics of the lottery or inheritance during social calls.

How would we spend it? Probably spend a year learning how to manage it. Some very nice vacations with perks like private tour guides and travel from nice places to nice places. We aren't party folks. Things like hiking, horseback riding, bicycling, sailing, etc. ;)

We'd need to spend at least some of our time about effective ways to help people in need. I've seen the effects of handouts on people looking for a free ride in life. It ruins them. I've also seen the effects of people giving to charities who have a high expense/charity ratio. The management gets rich, the monetary gifts don't go far.

[Eric]

This is, hands down, the best thing to do with the winnings.  Good luck to this guy.

https://www.youtube.com/watch?v=btAbU1sPqIM

[protostache]

Are the winners REQUIRED to publicize who they are?

Every state requires that you provide your name and tax ID so they can tax it properly. Almost every state will respond to the press with the name of the person or organization who claimed the prize.

Now, there are ways around that. In some states you can form a trust or LLC and send in your lawyer and/or accountant to claim the price.

Theoretically, in a state without anonymizing methods, you could legally change your name prior to claiming. You could hold the check in front of your face and wear anonymous clothes (see these Maryland winners). You could then change your name back after cashing the check. You could d

Basically, if you win one of these huge jackpots it behooves you to seek out professional advice, preferably from an organization that has done this before. There's at least one law practice that specializes in claiming lottery jackpots, but I don't remember their name off hand.

[notquitefrugal]

Are the winners REQUIRED to publicize who they are?

In most states, yes.

Money seems to poison some people's lives. I don't know if the extended family could handle it or not.

Generally, many members of my extended family could not. Even if you do "something" to help, that "something" is never enough to appease them. This is part of how many lotto winners get bled dry...

I'm sure that at least for a period of time we'd need to move away from our town for anonymity.

This is a start. Jack Whittaker in West Virginia lived in a small town (where he couldn't be anonymous) and was bombarded by random people asking for money due to some sort of alleged tragedy in their lives. Supposedly, sentiment amongst some of the locals was that he didn't give back to the community enough, even though he gave millions. I think this would not have happened to the same degree in a larger city where he could have been relatively anonymous.

Some sort of hobby business to account for our wealth. Even if it broke even at least I would never need to mention the topics of the lottery or inheritance during social calls.

A car wash worked for Walter White.

...

On another note, I seem to recall a lotto winner a few years back who was relatively Mustachian and planned to invest the money and grow it, living off a modest stipend. I think it was out west somewhere? I also seem to remember he already had a TDI Volkswagen, and planned to give it to a relative and buy himself a new TDI Volkswagen. Can't find any trace of him now. Maybe he wasn't a lotto winner but some sort of startup founder or other person who suddenly became rich. Regardless, I wonder whatever happened to him.

[Travis]

Some sort of hobby business to account for our wealth. Even if it broke even at least I would never need to mention the topics of the lottery or inheritance during social calls.

A car wash worked for Walter White.

...

I immediately started thinking about Goodfellas how after the heist they were all supposed to lay low for a few months and not spend any of it. I would definitely not change a single habit for a year simply because I wouldn't know what to do with that kind of money.  Joe Average saying he'd have to sit down and learn how to manage it is right on the mark.

[No Name Guy]

How a winner of a fat lottery could spend it all.

Easy, in one word:  Charity.

Even doing the investment thing and making 10-ish mill a year while never touching principal, it would be easy to cut fat checks to worthy causes for all but 50-200k a year, depending on how ridiculous one wants to be in any given year.  At least, that's my fantasy of winning a big lotto.  Of course....I would have to buy a ticket first.

[notquitefrugal]

On another note, I seem to recall a lotto winner a few years back who was relatively Mustachian and planned to invest the money and grow it, living off a modest stipend. I think it was out west somewhere? I also seem to remember he already had a TDI Volkswagen, and planned to give it to a relative and buy himself a new TDI Volkswagen. Can't find any trace of him now. Maybe he wasn't a lotto winner but some sort of startup founder or other person who suddenly became rich. Regardless, I wonder whatever happened to him.

I think this is the guy I was thinking of:
http://www.bicycling.com/culture/people/riding-high
http://www.kiplinger.com/article/investing/T031-C000-S002-turning-a-lottery-win-into-2-billion.html

[midweststache]

I was just about to post a similar article from the Washington Post (linked below).

Here's the paragraph that jumped out at me (emphasis mine):

After investing that $350 million in a conservative portfolio that earns an average of 3 percent a year, the move could generate a steady cash flow of about $10.5 million a year. (And that’s without spending down any of the actual prize money.) For the typical worker, that would be enough money to cover the bills, buy a nice car, offer some financial support to family and friends, and still indulge in some nice meals and a few vacations.

Wait... what?  10.5MM per year in perpetuity is enough to 'cover the bills, buy a nice car...and still indulge in ...a few vacations"??  That makes it sound like the kind of budget any doctor or lawyer might have.
This is $200,000 per week folks.  $28k per day.  After taxes. Forever. 

The article goes on to warn against investing too conservatively [in government bonds] because inflation may eat away at the principle.  While technically true, I think the analysis forgets that it's $350MM post-tax.  Even loosing 3%/year to inflation for 40 consecutive years the person would still have over $100MM.

sheesh.
Link to the WaPo article: https://www.washingtonpost.com/news/get-there/wp/2016/01/08/how-not-to-squander-the-800-million-powerball-jackpot/

HA HA HA.

DH came home with three tickets yesterday. I rolled my eyes.

I told him if we beat the 292,000,000 odds, we'd take 5 million to pay off student loans, buy a modest home and used car, sock the rest in a moderate/conservative portfolio (which I thought was incredibly generous), live off the dividends, and set up a non-active charitable Foundation for the rest.

He said, "Only 5 million? I think we'd need 25 million to be safe."

EYE ROLL.

[gripracks]

Give it away!  I agree with the folks who suggested charity, or setting up a foundation from which to use the money to help others.
We watched the documentary "Lucky" last night about lottery winners (http://www.imdb.com/title/tt1159712/)
It was depressing how the money generally made people isolated and lonely.

[Drifterrider]

Are the winners REQUIRED to publicize who they are?

It all depends on your jurisdiction.  Some states require you to allow the use of your picture, some honor your anonymity.

[Guses]

How a winner of a fat lottery could spend it all.

Easy, in one word:  Charity.

.... And Brenda, Precious, Tara-Lee, Monica, Reeta.....

It's not cheap you know!

[Capsu78]

I have read don't cash it until you have assembled your financial team.  You need to move out of your address of record and go under ground, either to a gated community or just "away".  I would think I would put everything into storage and start on a series of nice long cruises that departed the day I announced.  I would strongly consider setting up residence in Monoco where wealth blends in.

[MgoSam]

I would strongly consider setting up residence in Monoco where wealth blends in.

Only problem with that is that you can definitely feel the need to step up your lifestyle in order to comfort to your neighbors. You could be a billionaire in Monoco and still be considered low-class compared to the rest.

[Capsu78]

I have visited Monoco a couple of times and like it.
They have a saying I like too:  Monoco- A sunny place for shady people!

Oh, and I didn't win anyway so I guess it's back to looking at vacation slides again.

[MrMoogle]

On another note, I seem to recall a lotto winner a few years back who was relatively Mustachian and planned to invest the money and grow it, living off a modest stipend. I think it was out west somewhere? I also seem to remember he already had a TDI Volkswagen, and planned to give it to a relative and buy himself a new TDI Volkswagen. Can't find any trace of him now. Maybe he wasn't a lotto winner but some sort of startup founder or other person who suddenly became rich. Regardless, I wonder whatever happened to him.

I think this is the guy I was thinking of:
http://www.bicycling.com/culture/people/riding-high
http://www.kiplinger.com/article/investing/T031-C000-S002-turning-a-lottery-win-into-2-billion.html

From the second one:

Brad Duke asserts that he has created a system for successfully playing the lottery. "If you think about it, there's really only two ways to play," he says. "You keep track of the numbers and either bet on the ones that come up most frequently, because they're 'hot,' or bet on the numbers that haven't been chosen yet, because they inevitably will be."

Experts don't necessarily agree. Michael Lacey, a probability expert and mathematics professor at Georgia Tech University, said Duke's system is no more viable than any other

It made me laugh out loud.  Experts don't "necessarily" agree because it's not true.

[Papa Mustache]

How many times has Brad Duke won??? ;)