What If I Won The Lottery?
With all the craziness going around about Mega Millions having the most gigantic lottery prize in all of civilization (okay, not really, but it is the highest payout for a Mega Millions lottery), including my office spending a total of $136 in the last five days on tickets, I got to thinking about what I would actually do if I won.
A lot of people (this is all based on conjecture, not card hold facts) seem to get caught off-guard by their winnings, and between taxes and new cars and new houses and that must-have island off the coast of Fiji, they’re left without a dime in the bank after a few years. I vowed that if (and when) I won, I would have a plan.
(Plus, I wanted to know how much I could expect to have laying around for my Uncle Scrooge-style money vault that I could dive into. We can all dream, can’t we?)
With the help of Google Spreadsheets (shameless plug…and I’m not endorsing it; more along the lines of ‘hey, if you all go use this maybe it will get better’), I calculated just about everything I could think of, so follow along if you dare.
As of about 3 (PST) this afternoon, the winning amount would be approximately $370 million. As there are 11 people in my office, that means my share would be $33,636,363.64. That’s a lot. Now, after perusing the IRS web site for a while, I deduced that my winnings after taxes would end up being roughly $21,883,775.86. That might not be right, due to a lot of tax code I didn’t want to spend seven months reading. I arrived at that number by claiming the $33.6 million as gambling income, which you are required to claim on your 1040 as additional income, and then using the standard tax chart to see what I would owe the good ol’ United States Treasury.
Okay, so now we’re at $21,883,775.86. Not bad, not bad at all. I then figured I would give some money away (not to charity, we’ll get to that in a minute), so between my family, my best friend, and a trust fund for a cousin, I surmised that I would be left with $13,383,775.86.
Next I wanted to give away some money to good causes. I figured giving a few lump sums here and there to my old high school and the University of Washington would be good places to start. Then I started finding charities I wanted to donate to – like I said, I wanted to be prepared. After spending about a half hour on Charity Navigator, I came up with quite a few that I liked. After this portion of donating I was left with $11,483,775.86.
Next up was housing. I don’t want to become the next MC Hammer, so I better make sure I have enough money sent aside to pay my rent/lease/house payments until the day I die. Seeing as how we’re all told that we should be making four times as much as we’re paying per month for housing, I factored out 25% of the remaining money solely for that purpose. That comes out to be $3,987.42 per month for the next 60 years (which statistics lead me to believe is longer than I will be alive, but it’s better to be safe than sorry). I don’t know about you, but I’m pretty sure that I’ll be to get a pretty nice house for that kind of cash. Oh, and I still have $8,612,831.90 left, let’s not forget about that.
My parents and bosses and talking heads on TV are always talking about retirement, so I thought I should think about that as well. I decided to be generous, so that my golden years could be spent doing whatever I wanted, without fiscal limits. I decided to put away 1/3 of the remaining money, not to be touched until I am 65, in some sort of low-risk investment. This would leave me with $5,741,887.93 to live off of until I was 65.
Did you see that? I still have $5.7 million dollars to spend, even after donations and gifts and houses and retirement. That’s a lot of money! Time to splurge!
Well, four cars, two computers, and one home theater system later, I still have a gigantic sum of money left. In fact, I barely even dented that $5.7 million. After a few more calculations, I come to the realization that for the next 43 years (until that retirement money kicks in) I will have $357.66 per day to spend. That might not seem like a lot, but it would increase my current budget by a factor of eight. Eight!
Let’s summarize, shall we? If my office wins the lottery, I’ll be able to ensure the financial stability of my family, donate around $2 million to various charities, ensure my own financial stability (and put a roof over my head for eternity), and still have the salary of $89,000 per year, yet I won’t have to work. Oh, and did I remind you that this is all after I pay taxes? Meaning this money is all mine, forever?
As we all know, the odds are not in my favor. So as interesting as it is to dream about winning the lottery, the math is stacked up very high against me. But if it were to ever happen, I’ll be prepared.
And I’ll also be very ecstatic.