Don't bet on it!
Will Mega-Millions Fund Your Retirement?
by Stacy Johnson, courtesy of MoneyTalksNews.com
As lottery fever grips the nation, I thought it might be good to go back and revisit a lottery story I did a couple of years ago.
Imagine this: As you're reading these words, you're struck dead by a bolt of lightning. What are the odds?
Well, actually, the odds are 2,320,000 to 1. So you should be feeling pretty safe right now. But if you think those odds are comforting, you should feel the opposite when you learn the odds of winning a lottery. Your chance of winning a state lottery are about 18 million to 1. Sound bad? It's practically a sure thing when compared to Mega Millions. That multi-state lottery features odds of 176 million to 1.
Here's how the lottery stacks up against some other unlikely events, collected from this site as well as a few others from around the web.
- Odds of winning Mega Millions: 176,000,000 to 1
- Odds of winning the PowerBall: 80,089,128 to 1
- Odds of being an astronaut: 13,200,000 to 1
- Odds of drowning in a bathtub: 685,000 to 1
- Odds of dating a supermodel: 88,000 to 1
- Odds of writing a New York Times best seller: 220 to 1
- Odds of becoming a pro athlete: 22,000 to 1
- Odds that the pilot of your airliner is a convicted drunk driver: 117 to 1
- Odds of bowling a 300 game: 11,500 to 1
- Odds of dying from snake, bee or other venomous bite or sting: 100,000 to 1
- Odds of getting a royal flush in poker with the first five cards dealt: 649,740 to 1.
- Odds of winning an Academy Award: 11,500 to 1.
- Odds of being struck by lightning: 576,000 to 1
- Odds of actual death by lightning: 2,320,000 to 1
- Odds of being considered possessed by Satan: 7,000 to 1
Granted, some of these odds are, well, odd. For example, the odds of writing a bestseller would have to be higher than 220 to 1 if you never write, and the odds of bowling a 300 game would be nonexistent if you never bowl.
Presumably, these odds are derived by dividing the number of people in the world by the number of occurrences, which is not a very accurate way to determine some of these things. But the point is still glaring. Winning the lottery, especially the big, multi-state kind, is such an unlikely event that the odds are practically zero.
As Odd as Those Odds Are, Here's Something Even More Odd
As I mention in the video above, a 1999 survey by the Consumer Federation of America and financial services firm Primerica found that 40 percent of Americans with incomes between $25,000 and $35,000 thought their best shot at paying for their retirement was winning the lottery. And 27 percent said that their best chance to save $500,000 in their lifetime was with a lottery score. And that survey was conducted before the recent recession. According to media reports, lottery fever is only getting worse.
That's not only odd, but it's also sad. What's worse, the money these folks are spending on the lottery can add up to real savings. As I said in the video, if you're 25, save $5 a day and invest it at 10%, by the time you're 55, you can have nearly $500,000. I realize that earning a guaranteed 10% these days is also against the odds, but it can be done: check out my stock portfolio. Besides, interest rates on savings won't remain low forever. In the meantime, to find the best savings rates, check out our savings search tool.
Another better use for the money that goes to purchase tickets might be to pay down credit card debt. If you're paying 18 percent, that's like earning 18 percent, risk-free, and tax-free.
Finally, here's a sobering thought. Even if you beat the odds and win the lottery, you could still go broke. One example? Andrew Cicero of Muskego, Wisconsin won $5.5 million in 1995. Twelve years later, he was broke. "I thought I was set for life," Cicero told his local newspaper. "But it didn't work out that way." Here's an article with 8 more examples of people who won the lottery, then lost it all.
Of course, losing your winnings isn't the worst thing that can happen. Consider the story of Abraham Shakespeare. Five years ago, this Florida resident won $17 million in a lottery. Three years later, his body was discovered buried under a concrete slab. A woman who befriended him after he won was arrested as an accessory to his murder. Shakespeare's brother told the Associated Press that Shakespeare often told him that he wished he hadn't won the money and that would have been better off broke. Hard to argue he was wrong.
There are several great messages here:
- The lottery is exceedingly unlikely to make you rich.
- Even if you win the lottery, without some education, you could very easily end up broke again or worse.
- If you can put just a few dollars together on a regular basis, your odds of accumulating a big nest egg are excellent.
Nobody's suggesting you shouldn't have fun, and if you consider the lottery fun, go for it. But as a substitute for a consistent savings plan? You're better off planning on a career as a pro athlete or looking online for a super-model to marry.
Like this article courtesy of MoneyTalksNews.com? Sign up for their email updates and they'll send you a regular digest of their newest stories, full of money-saving tips and advice, free! They'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait?
Share your thoughts about this article with the editor: Click Here
Trending on TDS
- Saving on dog food
- Make your own jewelry for less
- Make your own faux volcanic rock
- How to determine grocery store wine quality
- Spend time, not money, on exercise
- Inexpensive bachelorette party ideas
- What you shouldn't (and should) buy in May
- 4 steps to a simpler (and more frugal) life
- 5 reasons to skip an all-inclusive vacation
- Secrets to living luxuriously for less
- Money-saving secrets of the rich and frugal
- Gain more by spending less