Do you feel lucky? The current Mega Millions lottery jackpot swelled to a record-setting $500 million when no one drew a winning set of numbers in Tuesday night’s drawing, prompting hopeful chance-takers to line up for hours to buy a ticket for their shot at a big payday in Friday’s drawing.
Say lightning strikes and you pick the winning numbers. It’s all too easy for newly-minted multi-millionaires to fill their heads with lofty aspirations, and to fill their lives with expensive houses, cars and other gold-plated purchases.
The reality is more sobering. Roughly 90 percent of lottery winners wind up blowing the money within five years, according to Don McNay, who has served as a financial adviser for several past lottery winners.
"Its true for pretty much any one who gets any kind of lump sum," he said. "72% of people who get an inheritance go through it in about 5 years, 60% of all NBA basketball players are broke within 3 years after they leave the league."
McNay cautions winners to think long and hard about their new financial reality, and there are some big decisions to make.
"With lottery winner its very different. If you inherit money, you probably know it for years that you're going to get it," said McNay. "A Lottery winner, you're working in a factory, you're working at McDonalds … and the next day you're a multi- multi- millionaire without the systems and the support and really the thought process of what to do with that money."
A California Mega Millions winner can opt for a one-time payout or a yearly check that increases over the course of 26 years. But don’t run out and buy your dog a Rolex just yet – the odds of winning Friday night’s drawing are about 1 in 176 million.
If you do win the lottery or find yourself with a windfall you didn't expect, McNay says its important not to flaunt your new wealth and to try and keep it personal.
"The worst thing you can do is tell somebody and let people know that you have money that you never knew you were going to have and don't have any real set plans for," said McNay. "A lot of people will think you're smart and wonderful and really good looking when they know you've got money."
What would you do with $500 million dollars?
Don McNay, financial adviser and columnist; founder of McNay Settlement Group, a litigation and financial consulting firm in Richmond, KY; author of “Son of a Son of a Gambler: Winners, Losers and What to Do When You Win the Lottery”