Sudden Wealth – Not Just Lottery Winners

Categories : Financial, News
August 23, 2023

For the second straight week, a winning Lottery ticket was sold in a Publix in the Jacksonville area. Although the recent prize is “only” about $36 Million (significantly less than the prior week’s $1.5+ Billion), congrats to our winners.

The two winners are classic examples of Sudden Wealth. Every day, a few Americans of various ages and locations are confronted with Sudden Wealth. Some inherit assets, while others score a big promotion, a big win in the Stock or Real Estate Market, or, as recently happened in Jacksonville (twice), a winning Lottery Ticket.

Sudden Wealth does not have to be in the Tens of Millions; it doesn’t even have to be over $1 Million. Wealth is relative, and Sudden Wealth means that it is most likely more money than the person has possessed at one time. Baby Boomers have already begun the transfer of assets to subsequent generations, which is resulting in frequent examples of Sudden Wealth. Without proper preparation, few people will be adequately equipped to make the most of their windfall.

In our day jobs as Certified Financial Planners®, we have met people whose Retirement Planning is limited to buying lottery tickets. With winning odds of one in a few hundred million, that is not sufficient Retirement Planning. Similarly, many people believe that they might receive a large inheritance. That is also not solid Retirement Planning. Toward the end of their lives, people generally incur large expenses, especially for medical needs, and can disappoint designated beneficiaries who planned (or hoped) to receive a substantial inheritance.

Any time you are notified of significant money coming your way, start interviewing Certified Financial Planners® immediately. Be prepared and comfortable with your selection. Know what you will receive, and have a plan to put it to work for you. That is smart Retirement Planning.

With our considerable experience in (other peoples’) Sudden Wealth, we have developed some relatively simple guidelines for the fortunate group. Foremost, the way to stay wealthy is to not spend the principle. Invest well and live off the returns.

We suggest that any newly wealthy American adopt the mindset of a corporate CEO with a single shareholder. Manage your own assets like a business you already admire. Imitation is indeed the sincerest form of flattery.

Personal safety is paramount for significant (lottery?) winners. Financial safety is equally important. Seek qualified, honest professionals, and follow their advice. We suggest finding a fiduciary, fee-only Certified Financial Planner®.

Few people appreciate how important it is to sign your own checks. The best way to know where your money is, and where it is going, is to retain control of the process. Only you should be able to sign checks written on your account.

Anyone who believes the old saying that money can’t buy happiness has likely never tried it. Plan first, and then act. You have the rest of your life to pursue happiness.

Van Wie Financial is fee-only. For a reason.