Here’s a little "up yours" to the "cash now" companies who use "live your dreams" advertising.
On December 26, 2002, Powerball winner Jack Whittaker won just under $315,000,000! He elected the lump sum distribution option, paying him approxmately $113,000,000, in lieu of guaranteed future periodic payments. Now just over 4 years later he’s broke. This is a story has got to be one of the greatest cases of sudden wealth syndrome financial mismanagment in history. The story can be found here (2007 story), here and here (2005 story).
Perhaps state governments ought to mandate that a certain percentage of lottery winnings , if over a certain size, be paid out periodically. Some may say that is patronizing, but consider that full dissipation puts people on the dole and a fresh burden on the taxpayer. From a public policy standpoint something is terribly wrong. A yes/no decision at the local newspaper stand after forking over a couple of bucks hardly qualifies as financial planning.
Had Whittaker been able to accept even 10-20% of his winnings in the form of periodic payments, in lieu of all or nothing it might’ve saved him financially. Had he accepted the whole thing in the form of payments over time he could have blown all his money up to that point, learned his lesson and gone on to living happily every after…at least from a financial standpoint.
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