How big does your lottery win need to be before you are set for life?
Do you play the lottery every week, sometimes twice a week, in the hopes of funding your retirement?
Someone’s got to win, but exactly how much do you need to win to set yourself up for life?
It depends on a few things, like how you want to live out your life, how old you are when you win, and what sort of legacy you want to leave, financially.
While some people are more than happy to put their feet up and enjoy the quiet life, others have a bucket list of exciting adventures they would love to work through.
There is no magic number that can be applied to everyone. What is important to keep in mind, especially for Canadian lottery players is that while your lottery winnings aren’t taxed, you will start paying tax as soon as your jackpot starts to earn interest.
You might be able to.
Sure, if you won a Powerball jackpot of a cool couple of million dollars or more, you could quit your job, if you wanted to do so. It’s not a big stretch, really.
But let’s say you won the second-place prize for Powerball that starts at $2 million when you play an extra $1 for PowerPlay. Would that $2 million be enough to set yourself up for life?
It comes down to your current financial position and living expenses. Let’s use a simple example to explain it. Let’s say that you are married and close to sixty. You have about $30,000 in debt, including vehicles, loans and credit cards. You also own a house that you still owe $75,000 on. Since you work and have a retirement account, you have about $120,000 in retirement savings.
As you can see, that $2 million second division prize isn’t going to stretch very far at all. You might just need to aim for a big jackpot win.
Did you know that about a fifth of lottery players believe that winning a lottery jackpot is the best way to instantly build up a big savings account? Even though the odds of hitting the big prize aren’t in everyone’s favour, there is the hope that it would wipe away money issues and set you up for life. In fact, nearly half of all lottery players do believe that a big win would be the perfect way to fund retirement and live out their dreams.
But here’s the thing. Winning a big prize is not a ticket to easy street. That’s because, on average, most winners of jackpots are so quick to go through their winnings that they land up filing for bankruptcy within a few short years.
The secret, of course, is to surround yourself with financial experts who will help you invest, save and really make sure you’re set for life. You also need help deciding whether you should take your jackpot as a lump sum or in installments.
Let’s say that deposit everything, you win several million dollars in the next jackpot draw. With that windfall comes a lot of important decisions, especially in terms of how you receive your funds.
Most lotteries give you a choice to either take your winnings in one lump sum payout or receive it as an annuity, which is a series of annual payments spread out over the next couple of decades. The annuity continues for a set period of time, which means that if you pass away, you can still ensure your loved ones are set for life for the continuation of the payout period.
It’s difficult to say exactly how much you need to win to be able to put your feet up and never worry again. After all, everyone has different amounts of debt, different dreams and different ways of investing.
One thing is for sure, though. You won’t win anything if you don’t try!
Get the latest Powerball results today at Powerball.ca.