MegaMillions Lottery Is Up to $586M

As expected, the drawing is now up to $636M. Single ticket winner in SC would get $232M as a lump sum after taxes. First annuity payment would be $6.6M and the 30th year payment would be $26.8M. So adjust all numbers in this post UPWARDS!

I’m sure by the time I’m done posting this and DEFINITELY by the time the winning numbers are drawn, it’ll be higher. But we’ll go with that figure for this post.

That’s a nice chunk of change. For a single ticket winner in SC, that comes to a cool $215M after all federal and state taxes are taken out.

In past posts I’ve talked about what we’d do with the money if we won – moving back to NYC, traveling, monetary gifts to friends. And the numbers I’ve thrown out have all been presuming we’d be taking the lump sum. However, part of me reads the stories about all those people who go bankrupt after living the high life for a few years, and I can’t help but think that taking the 30-year annuity is the better way to go to ensure a bit more fiscal responsibility. And it promotes less of a temptation to live the high life and more of the determination to not waste the money.

The 30-year payout on the $586M in South Carolina equals $389M over that time. The first year’s payment would be $5.9M after all taxes are paid out, and the 30th year payment would be about $24.6M after all taxes are paid out. If we win tomorrow night, and live the next 30 years, we will be 74 and 77 years old, respectively, when the last payment is made.

Each year we will have received more than enough to live on, be generous to others, take care of our families, and avoid financial ruin. If we mess up one year, there’s always the next year to recover.

$5.9M the first year could do so much, too!

$590K to our church
$590K to various charities
$1.8M to set up college funds for the kids
$500K in gifts to friends/family (in increments of $12,000 each to avoid them having to pay taxes)
$250K to pay off the house, buy new cars to replace our 9- and 10- year old cars, take an extended global family vacation and splurge.

Spend the first year planning, figuring out what we want to do going forward. $5.9 million would enable us to have the freedom of leisurely decision-making.

And even after doing the few things listed above, that would still leave us with $2.1 million dollars for the year. Two. Point. One. Million. Dollars. In year one. That’s $175K PER MONTH. At that point we could just immediately invest 95% that money, leaving us with $105K POST-TAXES for the year to live on. And we’d be mortgage-free, car-payment free, with $2M invested and (hopefully) providing a minimum 4% annual return on the investment. $105K is not enough to go crazy, but is more than enough to be comfortable and not worry about the next paycheck.

And that would be more than fine, because the very next year we’d get a check for $6.3M. At that point we’d do the following:

$630K to church
$630K to various charities
$630K to start up college scholarships at our alumni universities
$3M to trust funds for the kids
$500K in gifts to friends and family

And you know what we’d have left after that in Year Two? More than $1.5 million dollars. Less than the previous year, but we’d also be giving more away. And it’s still a huge amount of money to live on and invest. Invest $1.4M and keep $100K to live on. Again, not a crazy amount but more than enough when you are mortgage- and car-payment free.

Because in Year Three? The check totals $6.6 million after taxes.

$660K to church
$660K to charities
$660K to provide more funds for the alumni scholarships
$3.3M added to the trust funds for the kids
$500K in gifts to friends and family

Still left with $1.48 million to live on and invest in Year Three. And at that point we can just begin investing everything and live off the (hopefully) minimum 4% interest we’d be earning each year.

And it goes on and on. Each year a do-over. Each year to give money to our church, to charities of our choice, to fund scholarships at our colleges and trust funds for our kids. Continually giving annual gifts to our closest friends and family. All the while knowing that we can’t go crazy – we can’t become a headline wherein we’ve lost everything due to the temptation of excess and thinking “we won’t be like those people.” Because I’ll bet 99% of the people who lose everything after winning the lottery are convinced they’ll do the right thing, too. But money changes people. And if we win the lottery, I don’t want money to change us.

If we made it to Year 30, and the $24M final payout, this is what it could be:

$2.4M to church
$2.4M to charity
$2.4M added to scholarship funds at alumni universities
$5.8M added to trust funds for kids (who by now are adults and able to begin getting payouts every 5 years as stipulated by the trust documentation)
$2.4M to friends and family (assuming that by that time much more than $12K could be given to each person before taxes are incurred)

Total left in that last year: $8.6M. Even adding in inflation over the next 30 years, that should be more than enough. Add in all the investments we’d have made over the past 30 years, and despite being 74 and 77 years old, we could very well be living out the rest of our days quite comfortably.

I don’t think getting an annual check versus the lump sum would enable us to go crazy because while we could certainly do whatever we wanted (oh, the traveling we could do!), it wouldn’t enable us to be completely stupid. We wouldn’t be buying white tigers and elephants to keep in the backyard. I wouldn’t be decorating my house with paint flecked with real gold just because we can. We wouldn’t be buying gold bars from vending machines in Abu Dhabi. Sure, we’d most likely move into a nicer house (and probably even move back to NYC and put the kids in private school), and we’d quit our day jobs, and I’d hire a personal trainer to come to my house each day rather than feel guilty that I haven’t hit my $10-a-month gym in almost four weeks. But I don’t think we’d be targets. Nobody would put out a hit on us or anything like that.

Anyway, those are my thoughts on tonight’s drawing, and for whoever wins it. Do I hope we win? Sure. But I hope whoever does win is the same as me – wanting to do the right thing, and determined to figure out the best way to ensure it gets done.

My Signature

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