Hypothetical question concerning winning a somewhat large lottery or jackpot?

Question

ok...lets just say you are in your 40's. you've worked many years, and think "if i could just win the lottery, i'd scrape this crummy town off my shoes, and move away and live comfortably for the rest of my life." Ok so you play a lottery, or a machine in Vegas. you win $300,000.00. The IRS takes their 33%, and so you get $200,000.00. You set out to do what you wanna do with the rest of your life, but then you think of all the family you have. you wanna be generous with the money. But if you are too generous, it's not going to last you as long as you thought. You might have to work again someday, IF you choose to help your family out. The question is, how much do you help your family out, where you can still live comfortably without having to work? Now you have a big family. brothers, sisters, aunts, uncles, cousins, nieces, and nephews. You gotta include all of those in your generousity, right? If you forget one person, you might get disowned. What do you do?

Answer 1

Its your money you don't owe them anything .

Answer 2

I have little sympathy for friends and relatives, especially relatives, if they want something for nothing. No matter how I get it, as long as it is legally done, and I have money in the bank, who says I have to give it away? Who says I have to be generous or get disowned, as you put it? Sorry, I might give a portion away to charity like the Red Cross, but otherwise, it is mine, all mine, to do with as I please and that does NOT mean supporting friends or relatives who want a handout.

Answer 3

First of all, $200,000 will not fund a decent retirement for somebody in their sixties let alone forties.  Here's a simple demonstration.  Let's say you're 49 when you win and you live to the age of 75 (roughly the current life expectancy, assuming medicine gets no better).  That gives you 26 years of retirement.  200,000 / 26 = 7692.30.  That means that if you kept all of the money you won and hid it safely away, you would have a lower standard of living than most people on welfare!  Now if you won a serious jackpot like the two hundred million dollar ones you sometimes see in Powerball, things might be different.

Now, I won't cop out of the basis of the question and leave the answer like that.  I don't think that really solves the question as you asked it.  To really solve the answer, I would employ the techniques of game theory in the way John Fobes Nash (the movie "A Beautiful Mind" was based on his life) used it to win the Nobel Prize for Economics.  Without boring you by going into an in-depth analysis, I think just showing the approach will make the answer obvious.

A professional game theorist would assume that each party would advocate selfishly for themselves to get the best possible outcome (remember, the family members are more selfish asking you to give them your retirement as you are to keep it).  The theorist would then examine all of the options each party had to choose from.  Again, I'll keep this model really simple and keep your options to either pay them off or keep all of the money.  The family can either do nothing or disown you.

Next, the game theorist would lay out the payoffs for each player as a result of the four possibilities if each of the four possibilities were carried out.  Your fear, as I understand it, is being disowned so let's take a look at the possible outcome of this.  From a financial standpoint, this is actually the strongest outcome possible for you and the least beneficial to them!  Why?  You have less mouths to feed, so your money doesn't get divided out.  From their standpoint, not only do they not have any additional money coming in by eliminating you from their life, they lose your companionship as well as the monetary value of the generosity you were likely to have given them (your potluck dish, gifts, an occasional loan in hard times) had you not won the money.  The person who has something others want is the one with the most power.  A person who disowns someone in their life with more power hurts themselves more than anyone.

On the other hand, instead of doling out the money to relatives (and family members will come out of the woodwork as will friends), and instead you invested and grew the money to a larger bankroll, you'd be in a better position to help your loved ones as unusual circumstances arise.  

Think of it this way, if the cabin pressure in an airplane destabilizes, you have about five seconds to slip your mask on before passing out.  If you are seated next to a child, you are instructed to save yourself first because if you pass out and the child doesn't know how to put the mask on you or them, you both die.  On the other hand, if you put the mask on yourself, you can save the child even if they've gone unconscious.

Hope this isn't too complicated.

Answer 4

Hypothetically speaking, I would worry about yourself first before anyone in your family.  Do you have debt that you think should be paid off?  If I had $200,000 after taxes, I'd pay off all or most of my debt FIRST, put at least half of what was left over in a savings account, and then worry about helping family.  I wouldn't worry so much about who would disown you if they don't get a piece of your pie but who deserves to be helped the most.

Answer 5

There's no rule that says you have to share money with extended family.  In fact, I'd try to keep my winnings a secret (if it's an amount like $300k, it won't likely get much press).  After paying off debt, I'd invest most of the remainder...wisely.  This helps you in a couple of ways.  First, you won't blow it on junk you don't need, and second, you'll make at least some decent change on interest.  Third, if greedy relatives get wind of your winnings, you can politely point out that the funds are tied up in investments.

Answer 6

$200,000 is certainly not "nothing".

But, it is also not nearly enough to retire on the interest.

It would take about 10-15 times that.

If I won $200,000 (after taxes), here's what I'd do:

$30,000 - charity

$35,000 - credit cards paid-in-full

$25,000 - sit in the bank - emergency fund

$30,000 - Retirement fund (Roth IRA, 401K, Mutual Funds)

$10,000 - neice and nephew's college

$20,000 - Each relative gets $1000

$35,000 - down payment on a house.

$10,000 - Set aside for a luxury vacation

$5,000 - strippers & beer

Answer 7

Personally, I am not going to give my money away to anyone.

You are talking here about $200,000 after tax.  Now in this day and age, this is nothing.  The reality for most Americans is that all they could do is pay off their debts, and have a bit left over for some luxuries.  By the time you pay off your mortgage, credit card debt, car payment etc. all you have left is a small amount.  Or perhaps none at all.  So it's hardly enough money to retire on, or go around handing it out like candy to friends and relatives.

If you were talking about a substantially higher amount, it might be a little different.  But I would still be loathed to start giving it away left and right.  Oprah was talking about this in an interview I saw the other day.  She was talking about how some relatives became greedy and selfish.  Even if you give them money, then they want more.  If you don't give them more money they become resentful and mean.  So as a general rule, it just isn't a good idea.

Answer 8

lol...this is toooooo easy.  You don't play the lottery.  The payoff is NOT worth it.  Enjoy your life and those around you...even that crummy town you would actually miss if you left.  Find the happiness and peace within yourself and then spread your light to others.  THAT is the best prize you can share.

Answer 9

i dunno?

Answer 10

You dont give any of them any money..instead you offer to help with things such as Watch thier kids, drive with them for the doctor or other things...but never give your family money..

If they keep demanding money to solve their problems then what is their real problem? the lack of money or the lack of self confidence to produce more money to fix their problems.

Too many people expect a hand out..thats whay our econmy is so screwed now...Not everyone can be on welfare!  is so who will pay all the bills?

Answer 11

Only 200,000?  That's not very much money really.  Especially if you quit your job, then that's only about 5 years salary for most folks.  If you want to use the money as a windfall and help out some people then maybe your parents if they need it, but $200,000 isn't going to go very far.