So you just won the $550 million Powerball jackpot, the second- highest in lottery history. Now what?
Perhaps it’s time for a tropical vacation or a new car. There are bills to pay, loans to settle, debts to square.
Past winners of mega-lottery drawings and financial planners have some more sound advice: Stick to a budget, invest wisely, learn to say no and be prepared to lose friends while riding an emotional roller-coaster of joy, anxiety, guilt and distrust.
“I had to adapt to this new life,” said Sandra Hayes, 52, a former child-services social worker who split a $224 million Powerball jackpot with a dozen co-workers in 2006, collecting a lump sum she said was in excess of $6 million after taxes. “I had to endure the greed and the need that people have, trying to get you to release your money to them. That caused a lot of emotional pain. These are people who you’ve loved deep down, and they’re turning into vampires trying to suck the life out of me.”
The single mother kept her job with the state of Missouri for an additional month and immediately used her winnings to pay off an estimated $100,000 in student loans and a $70,000 mortgage. She spent a week in Hawaii and bought a new Lexus, but six years later still shops at discount stores and lives on a fixed income — albeit, at a higher monthly allowance than when she brought home paychecks of less than $500 a week.
“I know a lot of people who won the lottery and are broke today,” she said. “If you’re not disciplined, you will go broke. I don’t care how much money you have.”
Lottery agencies are keen to show off beaming prize-winners hugging oversize checks at celebratory news conferences, but the tales of big lottery winners who wind up in financial ruin, despair or both are increasingly common.
There’s the two-time New Jersey lottery winner who squandered her $5.4 million fortune. A West Virginia man who won $315 million a decade ago on Christmas later said the windfall was to blame for his granddaughter’s fatal drug overdose, his divorce, hundreds of lawsuits and an absence of true friends.
The National Endowment for Financial Education cautions those who receive a financial windfall — whether from lottery winnings, divorce settlements, cashed-out stock options or family inheritances — to plan for their psychological needs as well as their financial strategies. The Denver-based nonprofit estimates that as many as 70 percent of people who land sudden windfalls lose that money within several years.
“Being able to manage your emotions before you do anything sudden is one of the biggest things,” said endowment spokesman Paul Golden. “If you’ve never had the comfort of financial security before, if you were really eking out a living from paycheck to paycheck, if you’ve never managed money before, it can be really confusing. There’s this false belief that no matter what you do, you’re never going to worry about money again.”
David Gehle, who spent 20 years at a Nebraska meatpacking plant before he and seven ConAgra Foods co-workers won a $365 million Powerball jackpot in 2006, used some of his winnings to visit Australia, New Guinea and Vietnam. He left ConAgra three weeks after he won. Most of his winnings are invested, and the 59-year-old still lives in his native Lincoln.