If you’ve ever won the lottery, you know how huge of a windfall the winning ticket can be. However, you don’t want to spend it all right away. You don’t want to fall victim to scammers. That’s why it’s important to maintain an anonymity once you win the lottery.
The amount of money a lottery winner can receive varies from one state to the next, but they’re generally not paid out in a lump sum. Depending on the type of prize you win, you can choose between a one-time payment or an annuity. However, note that the latter payment will be less than the advertised jackpot, since you’ll have to account for the time value of money and income taxes. Furthermore, withholdings vary by jurisdiction. This means that you’re only likely to pocket about 1/3 of the advertised jackpot, if that.
A famous lottery winner who failed to spend her money wisely was Evelyn Adams. She won two multi-million-dollar prizes in New Jersey in 1985 and 1986. Unfortunately, she spent much of her money on gambling and bad investments. She eventually moved into a trailer, and her money hasn’t been recovered.
While winning a lottery can bring great financial freedom, a big portion of lottery winners lose it within five years of winning. Whether a winner spends their money or keeps it in the family, it’s important to remember that the odds of bankruptcy don’t change much once you have won. For example, a lottery winner who won a prize of $50 million is 50% less likely to file bankruptcy in the first two years.