Sunday, March 1, 2015
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Advice for lottery winners: 70 percent lose it all in 7 years

By
From page C1 | December 02, 2012 |

Some incredibly lucky people in Arizona and Missouri are going to have a very merry Christmas.

The holders of two tickets had the good fortune of picking all six winning numbers in one of the biggest Powerball jackpots in history — a staggering $587.5 million.

Financial experts have a few nuggets of advice for these newly minted millionaires (and anyone else who comes into sudden wealth) to help them avoid becoming yet another riches-to-rags story.

First of all, hold onto a winning ticket. Stash it in a fireproof home safe or a bank safe deposit box. And don’t share the news with anyone, especially if you plan on keeping that ticket in a home safe.

Next, get a team of financial professionals in place. Winners need a certified public accountant, a lawyer and a team of financial advisers.

“The key is to make sure you have multiple sets of eyes watching everybody,” said Andrew Stoltmann, a Chicago securities lawyer. “The problem is when you have one person — a financial adviser or a CPA — being responsible for everything. That’s when problems pop up.”

Stoltmann added another word of caution. “Once that ticket is turned in and you have the check, you shouldn’t deposit it in the local bank,” he said. “The FDIC limits ($250,000 per account) would only cover a fraction of the prize if the bank goes under.”

Instead, he suggests taking the Powerball check to a large brokerage firm, such as Goldman Sachs or Merrill Lynch, which are institutions the government feels are too big to fail.

The Powerball winners will likely want to quit their day jobs, but Eric Tyson, author of “Investing For Dummies,” noted life goes on. If they do quit, they need to give lots of thought to what they want to do with the rest of their lives.

“Everyone likes the idea of being instantly rich, having anything you want and never having to work,” he said. “But most people overlook the enormous responsibility and the potential downside of instant wealth. I would take things slowly, and recognize you will need a lot of education as well as potential advisers.”

Beware of jealousy and envy, too.

“You need to understand how people who know you will be affected by the news,” Tyson said. “Some people may expect you will do things for them. You may feel obligated to share with people you care about. But you need to take time to think through what you want to do with the money.”

Beth D. Lynch, of Schneider Downs Wealth Management in Pittsburgh urged winners to watch out for family members and friends who come out of the woodwork with their hands out. She said the lottery winners also should consider making conservative investments.

“Even if they decide to only put some of the money in CDs and municipal bonds, they could live off the interest,” she said. “Even at today’s low rates, that would still be possible, considering the amount of money that is involved.”

Kate Byrne, a senior wealth manager at PNC Wealth Management, said advisers there often work with people who have received multimillion-dollar personal-injury settlements and unexpected inheritances.

She suggested that instead of taking the state annuity payments, lottery winners should take the lump sum payout because they can buy a private annuity that pays more.

Although more than 90 percent of winners take the lump sum, Stoltmann believes it is best not to.

“If you make the common cataclysmic mistakes that so many lottery winners make the first year, you’ve got major problems,” he said. “Whereas if you take the payments over 25 years, you can make those bad mistakes and have 23 or 24 more years to go.

“There are studies showing 70 percent of lottery winners have no money left after seven years. If you have payments coming to you over 25 years, you will be in good shape.”

Scripps Howard News Service

LEAVE A COMMENT

Discussion | 2 comments

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • JohnApril 03, 2013 - 1:13 pm

    I have a neighbor that won $1 million in the lottery, paid off some stuff and then put it all into investments. He has four kids and a wife. Since they don't have much earned income, they are collecting food stamps and getting all of the benefits of being low income. The wife is working at McDonalds a few hours month to show that have income so they can qualify for all of the low income benefits. It's a total game of the system.

    Reply | Report abusive comment
.

Solano News

Peace and patience: Quilters gear up for show

By Amy Maginnis-Honey | From Page: C1Comments are off for this post

 
School bands compete in Pageantry on Parade

By Susan Hiland | From Page: A1, 1 Comment | Gallery

 
Calling someone a ‘smoker’ is hilarious

By Brad Stanhope | From Page: A2

4-H Presentation Day brings fun, education to Fairfield

By Susan Hiland | From Page: A3 | Gallery

 
Conservancy plans next Quail Ridge Reserve walk

By Susan Hiland | From Page: A3

 
Police seek suspect in armed robbery

By Bill Hicks | From Page: A3, 1 Comment

 
What you eat can affect your medications

By Marilyn Ranson | From Page: C4

 
Tri-City NAACP honors community members at gala event

By Bill Hicks | From Page: A5 | Gallery

 
CAASC 18th Annual Chinese New Year and Scholarship Celebration

By Steve Reczkowski | From Page: A5 | Gallery

Rollover in Suisun City

By Aaron Rosenblatt | From Page: A5, 1 Comment | Gallery

 
State schedules ramp closure at freeway project site

By Kevin W. Green | From Page: A5

Vigil doesn’t pan out amid concerns

By Bill Hicks | From Page: A5

 
Appointments on tap for Board of Supervisors meet

By Kevin W. Green | From Page: A5

 
NY, SF town house prices through the roof

By Bud Stevenson | From Page: B7

 
Fairfield police log: Feb. 27, 2015

By Susan Hiland | From Page: A9

Suisun City police log: Feb. 27, 2015

By Susan Hiland | From Page: A9

 
Airmen with local ties finish basic training

By Nick DeCicco | From Page: B10

Force draws many from South, middle class

By Tom Philpott | From Page: B10

 
.

US / World

Christie to Calif. Republicans: No rush to pick 2016 nominee

By The Associated Press | From Page: A1

 
US missionary abducted in Nigeria is courageous, friends say

By The Associated Press | From Page: C3

Dress that ‘greatly resembles’ stolen Nyong’o gown found

By The Associated Press | From Page: A5

 
Weekend storm drops snow, rain, hail in California

By The Associated Press | From Page: A5

Churches, synagogues, mosques bear tough New England winter

By The Associated Press | From Page: A6

 
Mother charged in death of infant found in California swamp

By The Associated Press | From Page: A6

Details about proposed national monuments in California

By The Associated Press | From Page: A10

 
National monument supporters in California get antsy

By The Associated Press | From Page: A10

Hyundai recalls 263,000 cars due to power-steering problem

By The Associated Press | From Page: A10

 
Blind dog rescued after being lost for 2 weeks in the cold

By The Associated Press | From Page: A10

US drone strike in Yemen kills 3 suspected al-Qaida fighters

By The Associated Press | From Page: A11

 
Greece will not seek another bailout, prime minister says

By The Associated Press | From Page: A11

Attacks kill 37 people in and north of Iraq’s capital

By The Associated Press | From Page: A11

 
Nemtsov a possible ‘sacrificial victim,’ investigators say

By The Associated Press | From Page: A12

.

Opinion

I might just vote for a Democrat next time around

By Letter to the Editor | From Page: A8, 4 Comments

 
Aging Fairfield housing agency faltering

By Letter to the Editor | From Page: A8

Editorial Cartoon: March 1, 2015

By Daily Republic Syndicated Content | From Page: A8

 
Sound off for March 1, 2015

By Daily Republic | From Page: A8

 
New school funding plan remains on bumpy path

By Dan Walters | From Page: A8

Even Gruber deserves a break sometimes

By Megan Mcardle | From Page: A8

 
.

Living

Today in History: March 1, 2015

By The Associated Press | From Page: A2

 
Community Calendar: March 1, 2015

By Susan Hiland | From Page: A2

With numbers falling, Houston-area nuns’ future uncertain

By The Associated Press | From Page: C3

 
Horoscopes: March 1, 2015

By Holiday Mathis | From Page: C4

Kidney Walk participation helped give me a positive outlook on life

By Kathy Mitchell and Marcy Sugar | From Page: C4

 
.

Entertainment

Review: ‘The Girl on the Train’ has realistic plot

By The Associated Press | From Page: C2Comments are off for this post

 
Take a look – Dr. Seuss has a new book

By The Associated Press | From Page: C2

Publisher launches line of Warhol e-books

By The Associated Press | From Page: C2

 
Q&A: Opera star Deborah Voigt writes of turbulent life

By The Associated Press | From Page: C2Comments are off for this post

PUBLISHERS WEEKLY BEST-SELLERS

By The Associated Press | From Page: C2

 
TVGrid

By Daily Republic Syndicated Content | From Page: B11

.

Sports

Vikings girls looking for first section title

By Paul Farmer | From Page: B1 | Gallery

 
Local Report: Vaca’s Aquino wins Masters wrestling title

By Daily Republic staff | From Page: B1

Phegley hopes his style will catch on in Oakland

By The Associated Press | From Page: B1

 
A year after meeting Tiger, Indian golfer on the rise

By The Associated Press | From Page: B1

Jeff Gordon takes a final spin at track that meant so much

By The Associated Press | From Page: B1

 
Anthony Mason, rugged forward of 1990s Knicks, dies at 48

By The Associated Press | From Page: B2

Warriors center Festus Ezeli suspended for a game

By The Associated Press | From Page: B2

 
Reichelt leads Austrian World Cup downhill sweep

By The Associated Press | From Page: B2

Players’ union head: future spring games in Cuba possible

By The Associated Press | From Page: B2

 
Harrington takes 36-hole lead, then more rain in Florida

By The Associated Press | From Page: B2

Defending champ Federer beats Djokovic to retain Dubai title

By The Associated Press | From Page: B2

 
Safarova beats Azarenka to win the Qatar Open

By The Associated Press | From Page: B2

Environmental activists disrupt meeting by Olympic officials

By The Associated Press | From Page: B2

 
Hamilton hones Mercedes with fastest time at F1 testing

By The Associated Press | From Page: B2

Thunder’s Russell Westbrook has surgery on cheekbone

By The Associated Press | From Page: B2

 
Harvick wins Xfinity race at Atlanta for 3rd year in a row

By The Associated Press | From Page: B4

Stolen No. 44 NASCAR race car found in suburban Atlanta

By The Associated Press | From Page: B4

 
.

Business

Fruits and vegetables get a star-studded marketing push

By The Associated Press | From Page: B7

 
For many in US, cash saved at gas pump is staying in pockets

By The Associated Press | From Page: B7

Historic snows causing headaches for real estate industry

By The Associated Press | From Page: B8

 
Nevada casinos keep $953.7 million in winnings in January

By The Associated Press | From Page: B8

Boy, 13, builds Braille printer with Legos, starts company

By The Associated Press | From Page: B9Comments are off for this post

 
Recalls this week: hand trucks, ceiling fans

By The Associated Press | From Page: B9

Review: Freedom! These smartwatches leave the phone behind

By The Associated Press | From Page: B9

 
Greek prime minister rules out third bailout

By The Associated Press | From Page: B9

AP Exclusive: Fuel-hauling trains could derail at 10 a year

By The Associated Press | From Page: B12 | Gallery

 
.

Obituaries

Leah E. Hoffman

By Nancy Green | From Page: A4

 
Thomas Browning

By Nancy Green | From Page: A4, 1 Comment

Jacqueline Mendes

By Nancy Green | From Page: A4

 
John W. Van Wart

By Nancy Green | From Page: A4

Lester Singer

By Nancy Green | From Page: A4

 
Virgil Albert Hanson

By Susan Hiland | From Page: A4

.

Comics