How to Win the Lottery

Close your eyes and imagine you have more than enough money to meet all your needs. The paid-off house you live in has a fridge and pantry full of food, you have a reliable car with a full tank of gas, and you have two trips abroad planned and paid for. You are easily in the top 1% in the world. Now visualize how you got here? Was it a windfall, like a lottery ticket or jackpot on slot machines?

Winning the lottery is sexy. You spend a couple bucks on a ticket, and have the chance to walk away a millionaire. Lottery statistics are against you, but you knew that before you bought the ticket. Against all odds, you’ve won. America loves a good come-back story. Unfortunately, for the other 174,999,999 people, they all have to go back to work tomorrow and earn more money for that next powerball ticket. I’ll let you in on a little secret, you don’t have to close your eyes and imagine what it would be like to have to go back into work because you are one of those people. Count yourself fortunate, 70% of lottery winners are broke within 5 years. Damn, that’s tough luck. To beat all the odds and become a lottery winner, just to have the odds stacked against you again that you’ll be able to maintain any money past a few years.

You have a 1 in 292,201,338 chance to hit the jackpot. I know big numbers are hard to visualize, so here are a couple of ways to picture it:

  • You would have to combine every dollar of net worth of both Shark Tank investors Robert Herjavec and Lori Greiner to equal that number.
  • You are 4 times more likely to die in an asteroid strike, 30 times more likely to die in a terrorist attack, and almost 300 times more likely to get struck by lightning than winning the lottery.
  • If every single man, woman, and child in the United States bought a different numbered ticket one person would win. It’s safe to say they don’t, that’s why the damn jackpot grows week after week.

Your chances of winning next week, and the week after remain the same, 1 in nearly 300 million, no matter how many weeks in a row you play. At two drawings a week, and $2 a pop, they surpass $1 billion in earnings in less than 3 weeks, but there isn’t a 1 billion dollar winner that often, otherwise the lottery system wouldn’t last long. Americans spend over $70 billion a year on the lottery.

You want to hear the mind-blowing part about that? That $70 billion on lotto tickets is more than Americans spent on sports events, books, video games, movie theatre tickets, and music all combined. That works out to $630 for every household in America. I know our household doesn’t spend a dime on it, so that means another household is spending double that. I’ve heard that the lottery is a tax on the poor, but how true is that? Well, one study suggests that the poorest 30% of people in the country account for more than 1/2 the lottery tickets sold. I don’t want to be “that guy”, but it seems pretty clear why 70% of lottery winners are broke within the first 5 years, and that’s because poor money management is what got them the lottery tickets in the first place.

There are roughly 11 million millionaires (try saying that 3 times fast) in the United States, or 1 in 30 people. Your chances of being a millionaire are incredibly higher than your chances of winning the lottery. I haven’t seen a study on this, but based on the information I gleaned from “The Millionaire Next Door”, I have to imagine that the likelihood of those millionaires playing the lottery has to be astronomically low.

Now that I’ve burst your bubble, I’m here to give you some uplifting news. You can win the lottery anyway, as can every one else that takes control of their life. If you make the median income of $60,000 a year, and you save 1/2 that per year, with an interest rate of 7%, you’ll be a millionaire in less than 18 years. Now, according to historical data, you can withdraw 4% of your invested income per year for 30+ years with a 95% success rate. For those of you still keeping up, 4% of $1 million is $40,000. Imagine having a virtually guaranteed income of $40k a year, and the possibilities that could open for you. Try a new job, go part-time, travel for a year, volunteer, focus on your health, sit on your ass and play video games. $40,000 might not sound like much to live on, but 40% of families in America earn less than $40,000 per year. Hell, according to a study published by Forbes, 69% of Americans have less than $1,000 in savings, and 1 in 3 Americans have less than $5,000 in retirement savings. That same 4% rule applied to that $5,000 that 30% of Americans have works out to a whopping amount of $200 a year.

Correlation is not causation, but there is a striking similarity between the 30% of people who have less than $5,000 in retirement savings, and the same percentage of people account for over 1/2 the lottery ticket sales. Take that $630 that the average household is spending on lotto tickets and invest it instead of wasting it on scratch-offs, after 30 years you’d have nearly $65,000. The odds are in your favor when it comes to keeping that money and investing it.

Wake up people! A windfall retirement plan is not only astronomically unlikely, but even if you manage to get it, chances are it’ll last as long as a presidential term. Tried and true methods of making money, living below your means, and investing the difference is the likeliest way for you to hit the lottery and never have to worry about working for money again.

4 thoughts on “How to Win the Lottery

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