Powerball fantasy

by Finn

With the huge Powerball jackpot having put lotteries into the spotlight recently, perhaps we can indulge in a bit of fantasy.

What would you do if you won a lottery? Would you take the lump sum, or the annuity? Would you keep working? Buy a new house? Pay off your mortgage? Invest it, and if so, how?

Obviously, one factor in the answer to these questions is the size of the prize. What would you do with, say, a $1M (lump sum) prize? A $10M (lump sum) prize? A $100M or larger (annuitized, less if lump sum), prize?

At a more mundane level, do you buy lottery tickets? If so, do you buy regularly, or just when the jackpot reaches a certain point?

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118 thoughts on “Powerball fantasy

  1. I don’t buy tickets regularly – just when the pot is crazy large, or I feel like spending $1 to engage the fantasy of what I’d do if I won. I would not keep working, because I would make managing the money my full time job. In a previous life as a bank examiner, I would review the applications to but the bank, and always wondered about the people who listed their occupation as “investments”. If I win, that would be my new occupation

    We would definitely take the lump sum. If it was small, my husband could keep working. Medium and we could both move on to full-time hobbies. If it was large, I would use a fairly significant amount of it for philanthropy, and think I could make a full time job out of just researching what to do with the money. I would definitely buy a large vacation compound with room for siblings’ families and cousins or friends to join us.

    I like to be busy and like to use my mind, but really would enjoy being able to do it on the time schedule and location of my choosing.

  2. When you get up to about $500,000,000 I think you kind of have to do some kind of philanthropy. Less than that…well. I’d buy a much nice house in the Bay Area! And I’d travel by charter all the time.

  3. I would not keep working, because I would make managing the money my full time job.

    What’s to manage? 50% in SPY and 50% in VICSX and call it a day.

  4. There’s the time spent staring in disbelief at the balance, the multiple daily log-ins to make sure it’s there, and my name is on the account, and a possibly not-insignificant amount spent just throwing piles of money in the air and letting it rain down on me.

  5. We had powerball tickets, total winnings in our household $5.

    We all know, regardless of the way you take the money, taxes will take a large chunk up front. My dollar amounts are based on gross, not net.

    Anything under $1 million would go right into investments. Our house is paid off, our cars are paid off, our credit card debt is paid in full monthly. Our biggest upcoming expenses will be DD#1 in college in 2.5 more years and DD#2 in college in 4.5 more years. While we have about 50 -60% of the total cost covered and expect the other 40-50% to come out of current expenses. Since they have both, to this point, have been in private school, those monthly outlays will be shifted to their college expenses, which should be sufficient. But, this windfall would pay it all without any more worries.

    Anything $1 million and over, first a major vacation would come out of that. DDs have wanted to see some foreign countries and we could do it easily with that kind of windfall.

    Anything $2 million and over, I’d like to do some major remodeling to our home. Some things will be done regardless, but with that windfall, the downstairs would be partly reconfigured to make it accessible for walkers and wheelchairs for our later years as we like our location. Or, we’d start looking more seriously for the place to downsize to.

    Working — I’m working part-time and would continue to do so as long as the job didn’t change significantly. When I first retired, I didn’t realize how easy and fast your mind can become lathargic and your productivity decrease because you don’t have the same demands on either your mind or your time.

  6. DH or I will play Mega Millions or Power Ball about once a week. We don’t play when the jackpot is crazy large because I feel like your life would be ruined. If it was a few million, we would both “retire”. DH would probably do some carpentry and we’d move to Cape Cod. $1M and under we’d probably just invest and keep on keeping on. $10M+ retire, do some fun stuff, move and travel a lot.

  7. I would take the lump sum, and try to invest it in myself instead of letting the government have it, and distribute via annuity. The problem for me is NY state has one of the highest state income tax rates, 8.82%. plus federal etc. If it is a $1million jackpot, I’m still working since sit won’t be much after taxes. If it was the big jackpot from a few weeks ago, I might never work again unless it was something I loved doing each day. We usually buy tickets when the numbers are really high, but that’s probably just a few times a year.

    If I won today, I would be buying Springsteen tickets from a broker. I HATE HATE Ticketmaster, and the process to buy tickets fro events like this one. DH is a huge fan, and it has become almost impossible to get tickets to certain concerts and sporting events unless there is an Amex presale.

    If I won a big jackpot, I would move. I don’t care what I would get for this house, but I would sell as soon as I could find my dream home. I don’t think I would move out of the county, but I would move to a different town. I would also buy my dream apartment in NYC, but I wouldn’t want that to be my primary home.

    I would buy an apt for my mom in Florida. I know she would love to finally retire, and live there for at least half of the year. I would try to help my brother move because they need a larger home.

    I wouldn’t fly coach ever again. I would still take the subway because I think it is faster than cars at certain times, but I see no reason to ever fly coach again.

    I would buy certain pieces of jewelry that I’ve always admired, but knew that I never needed to own.

    I would hire a personal chef so we could finally eat healthier meals all of the time. I wouldn’t want anyone to live with us full time because I hated that when we needed live in childcare.

    I would donate money to certain causes, but I would focus on hunger in America. I think this is a problem, and I would try to find food banks, or organizations that really use most of their donations for the recipients instead of spending too much money on overheard and operations.

    One of the friends that I met when DD was a baby is the daughter of a billionaire. She is a real friend, and it is interesting to see the life choices of someone with that much money. She has to be very careful about determining if someone is really a friend, or just trying to be her friend because of the money. She actually downsized from an enormous (GORGEOUS!!) 12,000 square foot mansion to a much smaller house to live near her kids school. She shops at Target, and does her own food shopping. She is totally normal, but her life is just easier.

    There are hospital wings and buildings at private schools named after her father or family. She never has a problem getting her kid into certain schools because her dad just donates a lot of money and she ends up on the Board of Trustees etc. They always get appointments with the best doctors, but that doesn’t stop life from happening to them. cancer, divorce etc etc. It is just so much easier, but they still have all of the same problems with bullies at school, vomiting kids, bad teachers etc.

  8. I always thought that I would use the money to start public or nominal cost schools for girls in the developing world, but then I would spend all my time worrying about the staff.

    Maybe it would work better if I did it using the Carnegie library model, and let the locals staff it.

  9. “What would you do with, say, a $1M (lump sum) prize? A $10M (lump sum) prize? A $100M or larger (annuitized, less if lump sum), prize?”

    DH and I fantasize frequently about this. Under all three cases, our first call would be to the FP we’ve used to help us out in the past (and he does my taxes).

    $1M lump sum would be used for us to get ahead on some projects, invest some, and set up an account to pay for the house monthly without me having to write the check. We’d still both work.

    $10M lump – fully fund retirement and DS (and potential siblings) college funds, squirrel some money away for the nieces/nephews/small cousins, move to a new house in the next town over, both continue to work for a while until we see what the income stream is on the investments.

    $100M – at this point, if I were under 40, I’d go for annuities, especially if it continues to my estate if I croak. We’d do everything that we were considering at the $1M and $10M, except we wouldn’t work, buy a retirement home (vacation home now), and just never worry about anything ever again.

    Now, back to my reality…

  10. Oh, I’d do a lot of philanthropy. I can’t be anonymous in RI with the lotto, so I’d have a lot of friends. I’d probably hire someone to help me figure things out. I have some causes near and dear to me now, and I”d probably figure out how to use the money to make a true difference – not just throw money at the problem, but come up with viable solutions.

  11. Fun topic!

    I’m always looking for excuses to ramp my initial career down to 0% and $1 mil in winnings would do it. At any amount, I’d donate a lot, and at those larger amounts, I’d set up a foundation for that purpose, likely staffing it rather than running it myself, as I would like to spend more time on career 2.

    DS told me, around Powerball time (though we didn’t buy tix and he knew we wouldn’t) that if we were to win that much, he’d quit college for now. I think it was just mid-year exhaustion talking, but it made me think for a while. If you won that much money, would you force college age kids to complete their degree right then or would you allow a hiatus?

  12. I bought a few tickets when I had Powerball fever earlier this month. We had a fun family dinner talking about what we would do with the winnings. When I first told DD (14) that I had bought tickets, she said, “That would be great Mom; I would never have to work again!”

  13. If I won “just” a million I would quit this job and spend several months to travel. Wouldn’t plan on retiring for good on this amount, would probably work PT.
    I would help out my family and in laws financially, and would donate quite a bit (the bigger the win, the more charitable donations). If a large powerball, I’d also start a foundation and staff out the work.

    We only play a couple times a year.

    It is fun to dream…

  14. ‘I like to be busy and like to use my mind, but really would enjoy being able to do it on the time schedule and location of my choosing.”

    THIS

  15. When my son forgot to buy my tickets for the latest Powerball, he assured me that he’d give me a million or two if he won. The thought was vaguely unsettling.

    The few times a year I buy tickets, I really believe I have a pretty good chance of winning. Human nature, I guess.

    I’m with you Lauren. It’s so frustrating to try to buy concert tickets. If I won, I’d probably attend a lot more live performances by my favorite artists. Front row seats, back-stage visits – that would be fun.

  16. would you force college age kids to complete their degree right then or would you allow a hiatus?

    Hell no, stay in school. If you take a hiatus you’ll never go back. OTOH, if the kid won, there’s nothing I could do, I reckon.

  17. I think of these one-time lotto winnings as a way to decrease my stress regarding debt, medical issues, or other events that will kill our savings. The base value would require that I still work, but be debt free and able to boost savings. Any amount after that would just decrease my stress. At some point, I would be stress-less. I could self-insure against almost anything. I’m not sure what that number would be… $5-10M after taxes? To totally self-insure, probably closer to $25-50M, but $5-10 would be a good start.

    I can’t not work. Maternity leave nearly killed me. I need to have a purpose other than keeping small humans alive. But I could choose what I’d do without fear of career trajectory issues.

  18. If I won today, I would be buying Springsteen tickets from a broker. I HATE HATE Ticketmaster, and the process to buy tickets fro events like this one. DH is a huge fan, and it has become almost impossible to get tickets to certain concerts and sporting events unless there is an Amex presale.

    That’s one of the nice things about living in a smaller city/metro area. You can usually get tickets to the big shows and events fairly easily. I’ve never not been able to get tickets to a concert I wanted to see. And they are also usually quite a bit cheaper than NYC prices. The last concert I got tickets for (Iron Maiden), I paid less than half of what a friend paid for the MSG show for much better seats (face value prices). Brocnos tickets are hard because they are mostly sold out on season tickets, and when the Rockies were in the playoffs, that was a tough ticket. But otherwise it’s usually not a problem.

    You should get tickets for the Springsteen concert out here. With airfare and a hotel it will probably still be cheaper than what you’d pay for the show there.

  19. If you won that much money, would you force college age kids to complete their degree right then or would you allow a hiatus?

    Force them to stay in college? Having had the time of my life in college that makes no sense to me.

  20. If I had won the big jackpot, I was going to contribute all but $50m to my family foundation that I was going to run. Kids would work there, too, if that is what they wanted after college. I don’t think my lifestyle would change much except I would fly NetJets and take the dogs. I would definitely take the lump sum. I don’t trust other people/entities.

  21. I never buy lottery tickets. I’m not against lotteries, but I just don’t get very excited by them. DH’s mother buys lottery tickets faithfully.

  22. “Force them to stay in college? Having had the time of my life in college that makes no sense to me.”

    I also enjoyed my college years.

    I wouldn’t want them to take a hiatus, but would probably fund them if they wanted to lighten their course load and extend a semester, perhaps two.

  23. If someone gave me a whole bunch of money like that, I would probably keep working, but maybe as an emeritus so I would only teach the classes I wanted to teach. I could keep my office and library privileges, and do more research. One of my colleagues at another school who I have worked with a lot does that now, and he seems to be a happy guy. I would also travel more and take business class. Oh, and definitely pay off the house.

  24. Denver, you’re totally right. We did plan a vacation around a Springsteen concert in Toronto.
    DH could have easily purchased tickets to see him next month in Florida, but we have no coverage for DD. We could buy the tickets at face, and find cheap flights. We took her to the Toronto concert and she wore noise canceling headphones, but she is much older now and she doesn’t want to go to another concert. She is going to see Bieber in the Spring, and I will definitely be wearing earplugs for that show.

    I have a feeling that we will just pay up to see him in brooklyn, The dates didn’t work for us this month at Madison Square Garden, but I know DH doesn’t want to miss this tour.

  25. Fun exercise! If we get get 1M, nothing will change, except stress. We will keep working. At 10M, all money related stress will disappear and we will help out family and buy a nice house and invest the rest. We may or may not continue working or start our own businesses. At the next level, there will be a lot of investment and maybe purchase a small island somewhere nice and a plane to get there and back whenever we feel like. Ahhhh

  26. If we won even $1M, nothing would probably change. At $10M, DH would probably retire and I would go down to part time.

  27. My favorite game!

    “Why the lump sum?”

    Because I have the self-control not to blow it at once, I am convinced future tax rates can only go up, and the ultimate goal is an apartment on Central Park, so why bother if I don’t have enough cash in hand to do that?

    I buy tix when it’s over $100MM, or when I’m really annoyed with my job. What I’d do:

    $1MM (net): investments, fully fund college, build a garage, probably upgrade the toy car. Possibly retire a year or two earlier, but would not change anything dramatically.

    $10MM (net): That, plus pay off everything. Retire. Take a year off and figure out what I want to do when I grow up. Travel every summer and school break, maybe even in 1st class. Season passes at Taos, maybe upgrade to a SFH there if the $$ allows. This is basically the “retire 10 years early with the occasional splurge, but you better stay close to your current standard of living” amount.

    $100MM+: All of the above + crazy land. First, go to financial planner to figure out what to do with more money than I ever imagined, how much I can spend on housing/cars, how much I want to give to charity, and what a reasonable annual budget is for expenses with the remaining capital. Then first would be the real estate (cash). New house with many garages and many toys, like basketball court, pool, indoor pinball arena, pool table, TV room for DH’s video games, full Irish pub in basement, etc. Upgrade Taos. If we’re in $500MM-land, apartment on Central Park and place on the beach in T&C (can’t have it all on a “mere” $100MM). Upgrade vehicles to two seriously fun cars (e.g., Aston-Martin), because there is no way we will both agree on the same one, and we’d fight over who gets to drive anyway. Then from the annual budget comes the “make life easier and fun”: full-time housekeeper and lawn management service, private chef to create fabulous but healthy meals, and personal trainer to get us in shape and healthy. Hire private jets for all travel. Consider taking kids out of school and using private tutors so we can travel more and have more fun. Ravens’ sky box. Go to every major event I feel like — concerts, Super Bowl, etc. Then charity: set up a fund for nieces’/nephews’ college educations. Set up a foundation for charitable giving (both to do good, and so I can refer all entreaties to the foundation). Establish scholarship at my alma mater based on financial need. Oh, and give my family annual gifts to spread the wealth and enable them to buy larger houses, etc. And make sure our parents revise their wills to leave the $$ to the siblings. :-)

    Not that, um, I have spent any time daydreaming about this. . . .

  28. “I would be buying Springsteen tickets from a broker.”

    Or from me on Stubhub. I just sold a pair for his concert here next month for 2x what I paid for them. I bought 4, so DW & I are going for free. They sold in < 6 hours.

  29. $1M would change very little. Yearly gifts up to tax limit for kids and grandkid trusts, more charitable giving. Do all the remaining house redecorating and improvements (new windows, floors, powder room, window treatments, paint, restore piano). Spring for a new V6 Camry or maybe even an Avalon. Get a suite on a cruise or first class on a plane.

    $10M – buy a couple of condos in areas we want to spend time seasonally. Go between the homes netjet with the cats. Have a car service on speed dial. Travel with no worries that if it is too much for DH we can just leave money on the table and fly home. Pay off son’s mortgage and give the other three equivalent sums for a house/condo (maybe part of a house in California). Buy a six figure watch if one catches my fancy.

    $100M – not really in my dreams. I guess I would buy an apartment in Manhattan and a fractional ownership in a private plane, plus set up a foundation for my kids and grandkids to run if so interested. My true financial dream level is several billion so that I could purchase a pro baseball or football team.

  30. “My true financial dream level is several billion so that I could purchase a pro baseball or football team.”

    +1. I have wanted to own the Orioles since I was a girl.

  31. We don’t have a lottery here so for me it’s even more speculative — I’d have to purchase my winning ticket while traveling.

    $1M — college funding stress basically goes away. No scholarship and the school you believe is The One for you will cost us $60K/year? Yeah, we can do that. (OK, I might still be cavilling at the cost if it doesn’t seem like that particular school is worth the money it’s charging.) Maybe we’d finally hire cleaners, although idk, not sure I want to send kids off to college with the belief that bathrooms are self-cleaning. Same basic type of travel, but the travel funding would get looser. Basically, our same life, but a little more comfortable.

    $10M — Retirement date gets moved up (so a good chunk of it needs to go toward funding that). My husband probably would quit his current job although he’d probably look for something else before too long. Maybe significant house renovations. More travel, no longer sticking to coach. Netjet sounds good if it looks affordable at the new level of wealth. Once I got used to the money I’d no doubt think of more stuff.

    $100M — I’d probably do the $10M stuff and stash the rest away. It would take time for me to even think of what kind of things we could do with that money. And the inheritance questions would become much more serious, and you’d have the worry about how to motivate trust fund babies. My kids are unmotivated enough as it is and I don’t think it would help for them to think they never needed to work.

  32. I suppose with the $100M eventually I’d get to the point where the days of having a non-couture wardrobe and flying commercial seemed like a bad dream, and I couldn’t remember how we lived before the servants, but it’s a real stretch to imagine it from here.

  33. $1M – if that were net, we might pay off the mortgage (or at least to conforming) and nothing else, although I would probably start to commute less.

    $10M – QUIT MY JOB and work for myself (I would hire my current secretary to run my office if I could), DH would have his dream office/workshop, and we could take a lot more vacations. Probably step up charitable giving for conservation and music organizations, and help out family with student loans etc. Maybe hire an occasional sushi chef if we move to the country. :)

    $100M – I would start a foundation and hire people I like to run it while I swan around on Netjets or similar. :)

  34. Fun game to play…

    1 Million put in a pool and finish the backyard landscaping. Finish funding the kids colleges and not have the looming conversation with DD if the 60k dream school is really worth it.

    10 Million. The above, plus pay off the land debt, plant some more orchards, install some more high efficiency irrigation systems. By a house at the lake we go every summer.

    100 Million. The above, plus, put in equal sports facilities for girls at the kids high school. Set up some scholarships, buy a couple politicians to get rid of the pending eminent domain. Shop or more land.

  35. “I suppose with the $100M eventually I’d get to the point where the days of having a non-couture wardrobe and flying commercial seemed like a bad dream, and I couldn’t remember how we lived before the servants, but it’s a real stretch to imagine it from here.”

    Ha! I agree!

    If I had $1MM, I’d probably move – sell our current place and buy a modest condo in a highrise on the lake free & clear – basically pushing the 10 year plan forward 10 years, go on a nice vacation, keep my kid in private school through HS without question, and invest the rest for college/retirement without much change day-to-day except a little less stress and maybe the opportunity to retire a little earlier or buy a snowbird condo a little earlier in life.

    If I had $10MM, I would quit working, no question. Was it Milo that posted that finance blogger’s post about how if he had $10MM he’d spend the day managing “investments” and build a $1MM home or something? I remember that.

    I can’t even fathom what I would do with $100MM.

  36. $100M? Live in a hotel full time. Wake up every morning to the rattle of a room service tray bringing me my coffee and a light healthy breakfast. Have the maids send all clothing items on the floor to be cleaned, one’s underwear to magically return all pressed and folded neatly.

    That seems like it would be easier to do in a building with hotel services vs. trying to arrange that level of service individually.

  37. If I won enough to quit my job and put the kids through college, I would open free tutoring and advice centers for kids without means. I guess I would travel, build a new house on the same lot etc. but more money would give me the ability to do hands on philanthropy.

  38. I know a few people in the $10M-$25M range.

    Their cleaning ladies come every week, sometimes twice. And they do the laundry….

  39. “I would open free tutoring and advice centers for kids without means”

    I think this is a great idea.

  40. Wine,

    Sky mentioned having the cleaning lady come twice a week. With a hotel they would come twice a day. Once during the day when you’re out to do a deep clean and again while you’re at dinner for a light cleaning and turn down.

  41. Rhett-

    Would I get those same services living in, say, the Four Seasons or Ritz Carlton Residence properties? Is that the point of them? I could get behind that. It might be worth the premium not to have to hire everyone yourself, but still have a large, tasteful private residence for entertaining.

  42. Would I get those same services living in, say, the Four Seasons or Ritz Carlton Residence properties? Is that the point of them?

    Sure, but then you’re stuck on one place. If you wanted to home school you could spend a month at Claridge’s in London, then month at the Gstaad Palace, then a month at my favorite bucket list hotel – the Intercontinental Bora Bora:

  43. I don’t want to live in a hotel unless it is sound proof. I’ve stayed in some amazing hotels, but you can still hear doors slamming and toilets flushing. I don’t want to deal with other people’s noise.

    I would hire a personal assistant so I wouldn’t have to deal with all of the stuff that happens. For example, I had to take photos and deal with the Shade Store about 3 month old roman shades that already have a broken cord. I just finished with American Standard about a sink hat was never sealed. It would be so awesome to have a “wife” to deal with all of the hassles that seem to pop up at least once a week.

  44. I had to take photos and deal with the Shade Store about 3 month old roman shades that already have a broken cord. I just finished with American Standard about a sink hat was never sealed.

    Another reason to live in a hotel.

  45. I’m not living in a hotel. I would rather hire someone (s) to take care of everything that needs to be done in my own home or apartment. I lived in doorman buildings, and there is no privacy.

  46. “Live in a hotel full time.”

    Like Zach and Cody. And like them, you might consider living on a cruise ship.

    A lot of hotels seem to be converting to individual units, but managed by a hotelier. That would seem to fit your desires– buy a suite, and essentially rent it to yourself, including the hotel services.

  47. I’m surprised that for many $10M isn’t enough to retire on. Isn’t that $300-400K/year? How much do you need for retirement?

  48. Finn,

    I wonder how it would work out financially. It seems the typical person worth $100 million would own multiple homes which would entail substantial opportunity and carrying costs. I bet it’s cheaper to just have a nice suite wherever you happen to be at the time vs. maintaining multiple homes.

  49. “I bet it’s cheaper to just have a nice suite wherever you happen to be at the time vs. maintaining multiple homes.”

    But when you have $100M, you probably can afford to eat the extra cost.

    Or perhaps you’re the target demographic for Inspirato.

  50. I’m surprised that for many $10M isn’t enough to retire on.

    In my case, it wasn’t a question of it not being enough to retire on so much as my not yet being at the point where I want to stop working. I mean, if you were born into an independent income, would you really have wanted to say, OK, no reason for me to ever work a paying job? It seems like it would give you a lot of flexibility as to what you did — instead of working the aggravating job that pays well you could run the money-losing winery or make art glass or work as many unpaid internships as it took to get into publishing — but it seems like having some sort of career or profession is important for even those who could afford to never work to feel like their lives have meaning and they are making some sort of a mark in the world.

  51. But when you have $100M, you probably can afford to eat the extra cost.

    Right, but per Lauren’s comment, you’d still have a lot of needless aggravation.

  52. Like most here, $1M would allow the freedom to send the kids to whatever college they want to attend that they can get into.

    I’d probably pull my retirement up by a year, and suggest DW pull hers up by 2 or three years so we can have more time to enjoy what we can buy with the money. That would probably include a lot more traveling, and longer, more relaxed trips in which we rent an apartment of villa for a month or two as a home base from which to explore.

  53. “I’m surprised that for many $10M isn’t enough to retire on. Isn’t that $300-400K/year? How much do you need for retirement?”

    A lot less after my kids are through school and mortgage(s) is(are) paid. But then again, we’d want to travel more, and likely not in KOAs and hostels. In the end, it probably would be plenty — it’s just largely the unknowns. Seems to make more sense to see where you are vs. jump into a massive new lifestyle that won’t be sustainable.

    “I bet it’s cheaper to just have a nice suite wherever you happen to be at the time vs. maintaining multiple homes.”

    This is exactly DH’s argument when I start fantasizing about Central Park West. I have no logical justification beyond “I want it.”

  54. “Seems to make more sense to see where you are vs. jump into a massive new lifestyle that won’t be sustainable.”

    A common thread here.

    Perhaps with $1M or more, I’d rent LfB’s ski condo by the month. Or RMS’ Santa Cruz house.

  55. At $100M, I think I’d want to become a venture capitalist, probably focusing on technology to reduce our footprints on the planet, perhaps renewable energy.

    If one of my kids decides to go into engineering, I would definitely consider bankrolling a startup if either of them had a good idea.

  56. Well, you know the saying: the best way to make a small fortune is to start with a large fortune.

  57. HM,

    My thoughts exactly. Almost every lottery winner who went bankrupt did so after losing a ton of money in some business venture. Why can’t they just stick it in a nice bond/equity index fund, I will never understand.

  58. I guess with $10M I’d continue my lifestyle and pay off my debts (house, kids’ college). I would probably stop working for a few years until I figured out what my “passion” is that I wanted to pursue.

  59. “At $100M, I think I’d want to become a venture capitalist”

    @Finn — that was one of the fun things in thinking about the @$600MM net cash value of the huge jackpot: you could easily carve out $100MM as “play” money to invest in businesses that you thought were doing cool stuff. DH has spent the last year negotiating things both internally and with partners, over stuff that seems just silly, and I was thinking, wouldn’t it be awesome for him to just go to one or the other and say, screw all this, I’ll just give you $100MM and I want in.

    Of course, the real players in that world start with a “b,” not an “m,” so he’d still be chump change. But it would definitely be something that would keep him really interested and engaged — finding some small advanced tech stuff to bankroll at the $1-2MM phase.

  60. I was thinking about these ideas last week before the Powerball drawing. We were going to buy tickets but every time we went by a place that was selling them there was a line out the door! Oh well, the winning numbers were not even close to the numbers I would have picked, so I wouldn’t have won anyway.

    1 Million (assuming after taxes) – maybe sell our house and buy one in a neighborhood closer to downtown. The alternative would be giving some to my parents and children – maxing out the gift amounts for a couple of years, and investing the rest.

    10 Million – definitely buy a new house.

    100 Million – give money to our relatives, put a chunk in investment/savings (maybe 20 million?) and use the rest to do good works. I would like to pay the college tuition of a number of students at one of the local schools where it is a struggle to pay. Make one of those deals where if they stay and graduate from hs I will pay for their college.

  61. $1M gets all the debt out of the way, funds home improvements, fully funds all remaining college costs, sets up a vacation fund for between now and retirement, brings real retirement, whatever that will mean, closer. Without all of those looming financial requirements we could then enjoy life on our incomes while still socking away the legal max.

    $10 + M just sets up more security and allows us to do important things for those less fortunate.

  62. With $10M, I’d buy a sports bar and my son’s school. He’d get his diploma.

  63. PTM – I thought of you the other night when we were at dinner w/ friends. She is the “pricer” for your new Lincoln, and she was raving about it, showing us a lot of photos (which you may have seen), talking about the sexy door handles, etc. $1M would get you one in every color.

  64. Ris, you have put me into a dream world! No. One Lincoln Continental would be good enough for The Villages and my sports bar in Ocala. I want it in baby blue with a white naugahide top, white interior.

  65. Now I wonder if I would have to buy a condo in Ocala for the late night games at my sports bar. Ocala is too for (36 minutes) from The Villages. Do they even have condos in Ocala? I guess I’ll have to look.

  66. You didn’t mention if your kids want to go to specific places, or just want to travel internationally. Mexico City, Oaxaca, and Antigua Guatemala are all within easy travel distance for you, and are sophisticated cities that feel “foreign”.

    PTM, where is Ocala?

  67. just in case you don’t win powerball

    Yes, I find that I thought hard enough about this that now I’m kinda wondering when my $10M is coming. I have bad news for myself about that . . .

  68. Lauren, thank you for posting that NYT link.
    Everyone else: Please take the 5 minutes to read it, especially if you are considering buying an annuity to provide certain income in your golden years.
    The key take away for me: Social Security is an inflation-adjusted creditworthy annuity far superior to anything offered in the marketplace.

  69. “The key take away for me: Social Security is an inflation-adjusted creditworthy annuity far superior to anything offered in the marketplace.”

    That’s why DW and I both plan to wait until 70 to start collecting SS. Maximizing those payrments, along with a couple of other annuities that are not inflation adjusted, are what we’re counting on in case our savings run out.

  70. “$245,000 on health care during their retirement”.

    What has the experience of Totebaggers been with regard to this number ? (parents, spouses, their own health issues….)
    Thanks Lauren for posting the link.

  71. I think that number is about right in today’s dollars for a middle class couple, assuming 40 years of expenses after 65 (20 each, roughly) and MAGI (AGI plus tax free interest – don’t forget about Required Minimum Distributions out of Pretax accounts after 71 – runs 4-6% of balance per year in the early years) under 170K per annum so base medicare premium. Medicare/Medigap/Medicare Advantage premium 200/mo each. Medicine, appliances, health related modifications, copays/deductibles/coinsurance 3000/yr each. ED meds are not covered for seniors, BTW. Dental 1000 year/ea (no govt coverage). That comes to 256,000. If you think you will have less in medicine or dental, don’t forget that good hearing aids cost 2000 and up for each ear and after the warranty runs out you will need them adjusted for a fee. If you want a gold plated Medigap policy that covers deductibles etc, that can run 200 or more a month on top of the base Medicare premium of 120 (or more if your AGI exceeds the threshhold).

    And if you retire before medicare kicks in for one or both (medicare is an individual program) and you don’t have gold plated corporate/military/govt post retirement benefits, retirement years before 65 will include individual health insurance payments of 450 a month and up. And if you had kids late, you may need to buy family policies for a long time. None of that is included in that number. And LTC/nursing home/more than occasional health related help is not included either/.

  72. I am not familiar with the specifics that Meme outlines, but based on casual observation an average of about $6,000 per person per year seems very reasonable, assuming you don’t go on to Medicaid. Deductibles, prescription expenses, Medicare Advantage premiums, and other out-of-pocket costs can add up.

  73. Mémé, thanks for posting those numbers.

    I’ve seen numbers like $270k from Amex, so in my (very rough) retirement planning I’d rounded that to $300k in savings/assets that should be set aside just for medical, not including LTC.

  74. $300k in savings/assets

    Which is $18k a year annuitized. Did they mean you’d need 300k or you’d spend 300k? They aren’t the same thing.

  75. The estimate is for spending from a fairly reliable Fidelity website. It does not specify whether it is current dollars or real dollars, but does exclude dental care, OTC drugs, employer post retirement benefits and covers 42 years for the couple. The point of the figure is that most people think about housing cost, auto cost, food, travel and entertainment, and ignore the idea that normal medical costs will run them 500 per person a month. If a couple’s SS at 67 normal retirement age is 3500 a mo before medicare premiums are taken out, 1000 dollars a month is a pretty significant expense. (That is assuming yearly income for higher earning never exceeds 85% of maximum SS income base and lower earner either doesn’t work or doesn’t have a work history that provides a self earned benefit greater than 50% of higher earner), e.g. a very comfortable middle class income in the heartland.

  76. I think this is another reason why my friends with retired NYC teacher parents are driving great cars, and seem to be so stable in their retirements. The three that I know are mid to late 70s, and they all worked as NYC teachers for many years. They have the “Cadillac” plan for all medical, medicine, vision AND dental. I compare them to my father that worked for a private corporation, and he has fairly high out of pocket expenses for dental, and certain prescriptions. His out of pocket expenses are much higher each month compared to my friend’s parents because they have very minimal expenses fro anything related to medical or dental. My FIL is the same. He earned MC wages as a NY government employee, but his NY state retirement benefits are amazing. He is late 80s, and he has substantial health care costs, but almost everything is covered by the plan.

  77. In my line of work I frequently get estimates (prepared by various consultants) for post-65 medical expenses, and they are uniformly higher than the number cited above. (these are the big consulting firms, not the guys selling individual products who have an incentive to over-estimate). So I’d look at that as a very conservative estimate, and plan higher.

  78. I agree with Benefits Lawyer – Fidelity’s number is the baseline medical cost one should put into a model, IMO weighted toward the final 7-10 years. The less favorable to worst case scenarios are on top of that. I never can tell whether people are asking about a number like that, is that too much or is that too little. It is definitely not too much.

  79. Thanks all – all I can say is that I wish for is the relatively good health to continue for both sets of parents and for all our working members of the extended family to stay healthy enough to be able to work and support their health care needs. My FIL was in a government job that provided a pension and baseline health care in the home country but immigrating here meant that their health care has to be paid for. I am thankful for each year that passes smoothly and our being able to afford to care for our parents and children without our parents depleting their savings. DH and I also have to save enough for ourselves as well, that is why I was interested in the number. Winning even a $1M powerball would help a lot.

  80. There was an excellent article in yesterday’s WSJ about the power of HSAs as a retirement vehicle – goes right to the point you guys are making.

  81. “I am thankful for each year that passes smoothly and our being able to afford to care for our parents and children without our parents depleting their savings.”

    Is it important to your parents that they are able to bequeath assets to their children/grandchildren? I know others on this forum have expressed this as a priority. I place very little value on that. My more important objective is to be able to support myself in retirement without requiring my children to help support me. If that means dying with an estate that is worth zero, that’s fine with me. OTOH, as I approach the years where I will be living off my retirement savings (along with SS), I can sense the anxiety that can accompany spending down assets. I can see where there would be a worry that I will outlive my assets.

  82. AFT – My mom (81) and stepdad (89) came into a fair amount of money about 5 years ago; before then their finances were sufficient for them to live comfortably and presumably when they pass we’d sell the house and split the proceeds without much other cash/investments left. But now that there is more cash, leaving some to my sister and me is something mom really wants to do. Don’t know about my stepdad since he’s fairly estranged from his kids. My inlaws definitely want to leave a legacy to their kids and grandkids. It’ll be interesting to see how “the best way to amass a small fortune is to start with a large one” plays out. For some involved it will quite literally be like winning the lottery.

  83. So this happened in my world over the weekend:
    http://www.roanoke.com/news/crime/blacksburg/nd-virginia-tech-student-arrested-in-nicole-lovell-case-pond/article_f09f3259-4b3b-587e-87cb-3c07a3511230.html
    A student from my beloved university allegedly kidnapped and killed a young girl from my small town, and then another student (a young woman!) helped him dispose of the body. I’m still trying to find words for how this makes me feel. And trying to explain it to my almost-9-yr-old has been eve more difficult because we just don’t have much information.

  84. “Is it important to your parents that they are able to bequeath assets to their children/grandchildren?”

    @AFT: I think the best way to say this is that it was not a priority when it didn’t seem like a realistic option. Even now, any discussions relating to improvement of our finances focuses on “does this mean we can retire earlier” instead of “how much of a bigger pot can we leave?” That said, I am conservative enough that I wouldn’t feel comfortable with a plan that had us running out of $$ by 85 or 90. So we will probably leave some behind just because we’re planning to avoid outliving our $$.

    That said, this has become a huge deal to my mom. Since my stepdad died, she has become extremely focused on making sure that her estate goes to the kids and grandkids in the right way, minimizing taxes, etc. She has repeated the story several times about how my grandma’s second husband gypped me out of the $$ my grandma meant to leave me (a few thousand $$, not worth being *this* angry about this much later), so getting it right has become a real focus for her. She is much more conscious now about the legacy she wants to leave behind, and the financial is the easiest way to address that in a concrete way.

    And, obviously, if we get to the point where we have far more $$ saved than we would reasonably need for our lifestyle (i.e., if we inherit from both sides, since our current plan relies on 0 inheritance), then we will spend more time figuring out how to bequeath that consistently with both our values and how our parents would want their $$ to be used.

  85. AFT – one set of parents doesn’t have enough assets, to cover them long term, so the goal is to save whatever there is for true health emergencies. They don’t expect to leave anything. Another set of parents are quite comfortable and they are managing with their own funds. They hope to leave assets to their kids but the first priority is their own health needs. All the “kids” have Totebaggy jobs, so any assets in time would just be passed on the grandkids.

  86. I’m w/ LfB. I’m pretty generous with our kids, and I intend to keep that up, but no way am I working hard and socking away money so I can leave them a big gift later. I’m doing it so I can retire earlier–and better. Having said that, I would never write some big bequest to a charity without making sure the kids were well taken care of first, but those considerations assume I’ll get to 90 or whatever and notice that (despite having replaced every joint in my body–some more than once) I still have way more money than I can possibly use up.

    As I have alluded to here in the past, the ways of estate planning in my family of origin are so inequitable and excruciating that they are the stuff of novels (and yes, I just might, one of these days, once the main players are no longer with us). A simple division by 3 (the number of kids) has apparently never found favor. My main goal in anything we leave will be to exercise my math skills. Estate – divided by 4 = equal shares for each kid. Q.E.D.

  87. I have been very interested in HSA’s because I would like to retire before Medicare age and our 401(k) type contributions are already maxxed. But we are currently covered by very cheap-to-us, well-subsidized health insurance with good coverage with no penalty for a spouse (me) who has coverage through his/her own job. Taking myself off that plan and putting myself on a high deductible plan through my own job will cost me about $600 out of pocket for the premiums alone, before I even have one sick visit to a doctor. Now, I haven’t had a visit to a doctor that wasn’t for preventative care (e.g., skin check, annual visit, flu shot) in over 5 years. So will I come out ahead in the long run anyway? I’m torn. I really need to put more thought into this before our next Open Enrollment in the fall.

  88. The $600 difference includes the quite minimal amount that my employer will put in the HSA as starter funding.

  89. @Risley – home country tradition was girls were given their “share” at the time of their marriage. This IMO was never as large as what was left to the sons (the expectation that the sons would care for the parents didn’t always pan out). So, there was inequality right off. I can also write a long novel on the scheming which puts Downton Abbey to shame.

  90. Louise – maybe we should co-write this thing, to sweep a few different cultures into the drama!

  91. Ris – I agree with you on the estate/# of kids= share. But that still leaves you the opportunity to structure how each kid gets their share. In DW’s case 2 of the kids can/should get whatever’s coming to them in a lump sum since they are responsible with their $$ (DW is of course one of them). The other kid will run thru the bequest like water, so her access will be structured / limited.

  92. “My main goal in anything we leave will be to exercise my math skills. Estate – divided by 4 = equal shares for each kid. Q.E.D.”

    I’m not arguing that your choice is wrong, but I think this can be so tricky and almost any choice can be perceived as unfair. I recently had a conversation with a person who was considering a fair disposition of his estate, and one of the possible beneficiaries has significant physical and cognitive disabilities. It would not be wrong IMO to favor this beneficiary, but who’s to say who deserves more? Other less apparent reasons could be used to justify unequal shares.

  93. Yes, Fred, I have no problem with that plan. It’s the plans that appear to suggest there are only 2 kids in the family, not 3, and 4 grandchildren, not 8, that I find upsetting. :)

  94. * I recently had a conversation with a person who was considering a fair disposition of his estate,*

    I should have said a *wise* disposition.

  95. Well, sure, CofC, but as of now, that’s not an issue w/ my 4, and neither is it one b/w me and my sibs.

  96. My mother was the executor to her father’s estate and even with a complete equitable distribution among the five kids (+1 charity which was treated like a sixth kid) there was some squabbling. The lawyer told my mother that she had to wait a year to distribute everyone’s inheritance (and it was not huge, maybe $40K for each kid) in the event there were claims on the estate and she got a lot of flack from her siblings that they needed the money sooner and the lawyer was giving her bad advice, etc. It was crazy to see these 50 something adults needing that kind of money that badly.

    So for our parents they don’t have much and we may have to step in later, especially with my husband’s parents, but on the bright side there will be really nothing to fight over. I can’t imagine fighting with my sisters, but DH is worried about my dad’s house on Cape Cod being given to all three of us (with husbands in play). He feels like one sister in particular is going to want to sell for the cash or say she can’t help with taxes/upkeep (which is honestly quite likely). I don’t really care but I think DH will.

  97. I just had an estate attorney redraft all my documents. I am giving my two daughters a chance to weigh in before signing, since they are the designated trustees/executors. I won’t leave much if I live a long or a sick life. I am 100% with AFT on the funds being for my care with as little worry as possible to my caretakers, as was my mom, whose care was 9K a month in her last year at tippy top MA prices 8 years ago. The fact that she died (at 93!) 5 years before the doctors expected her to is what led to my windfall inheritance. The least I can do is to keep the tradition going. What there is left over will go to my 4 kids (or divided among their descendants) 3 shares each, my grandkids 1 share each. Under 25 in trust unreachable for education, just for custodial medical. If they waste it at 25, they waste it. The difficult part of the planning had to do with DH and how to specify that the house is sold immediately and he is relocated if still alive, and his share (exact division varies by circumstances) of the sale proceeds gets distributed to him or his son.

  98. “Is it important to your parents that they are able to bequeath assets to their children/grandchildren? ”

    This is really important to DH. I agree with Risley–we will likely leave the kids an inheritance, but I don’t want to diminish my lifestyle in retirement. We live a frugal lifestyle, so the only main expense (beyond shelter, food, healthcare) will be travel.

  99. SWVA, I’m sorry about this weekend’s tragedy.

    FWIW, when I was explaining Sandy Hook to DD I stuck to the 30,000 foot level: someone with a brain disease brought a gun into a school and killed people; all the grownups at your school and in our neighborhood have spent a lot of time thinking about ways to keep it from ever happening again and that’s why we do X, Y and Z.

    That way she did not hear it for the first time at school, or on the news.

    I hope that your DD is not too upset.

  100. I think distribution stuff is difficult. In my family of origin, two of the kids have way more than enough, one is solidly upper middle class and 2 struggle a lot more than the others. It seems as though the last two should get a lot more of my parents’ assets (if there are any). The $ won’t matter to the first two, would be nice for the middle and could be life changing for the last two. My parents are at odds as to how to hande. My dad wants to leave everything in equal shares and my mom does not. I know the first two plan on disclaiming anything, but you neve know what will happen and feelings that will get hurt.

  101. In one family we know, the mother left bulk of her estate to one widowed daughter (with low middle class income) and her son, and small amounts to two really well off daughters. The mother did not live to see the intense squabbling went on after. The really well off daughters could not stand the thought that mom left most of the estate to this daughter. Finally the widowed daughter agreed to equal shares just to keep peace within the the family.

  102. So often with these things it’s not just the money, it’s the money as the final determination of who mom/dad loved best. What the parents may think of as a reasonable recognition that some offspring need the money more than others, their adult children may perceive as a final and unjust bit of favoritism.

  103. “but you never know what will happen and feelings that will get hurt.”

    This is where we are, too. The last time I recall talking to my mom and stepdad about their estate, it was going to be divided in even 1/3s. Now she is talking about giving her money to me and his money to them, so I’d basically get 50% and they’d get 25% (depending on how each parent’s 401(k)s/investments did). Which, she says, is what they had decided to do before he died.

    So is that “fair”? Probably in the objective sense, because they did keep their $$ separate during their marriage. But it doesn’t *feel* fair to me. Luckily, I am also the executor, so I have stopped trying to convince my mom to change things and have just decided to rejigger it between the three of us as needed when the time comes.

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