Do you count on the lottery as part of your retirement plan?
My parents kind of do. Not as much as before, but I can see the desperation/hope in their eyes.
At least, before I got a hold of their finances (all the papers they didn’t try to hide from me by putting them into pots and pans), gave them a budget, a financial plan, and told them to start tracking their expenses with my budgeting tool.
They’ll be debt-free in April 2013, about 3 years sooner than the path they were currently on.
If I had gotten to them sooner, it would have been an epic debt repayment…
They now clear about $2500 of debt per month on their new plan, instead of paying the minimums and my mom can’t help but proudly show me the statements each month of how much debt she is knocking down on her line of credit and mortgage.
Before all that, they thought the lottery was their retirement plan.
The background to this insanity, is that my family won a small jackpot about 20-ish years ago.
With that money, a fancy trip for the whole family, a big splashy dinner, 2 fancy $10,000 watches, a new house and a new car later, they were on their way to what they thought was millionaire status.
Except that my parents didn’t work more than part-time jobs for about 10 years.
My mom had to go back to school in middle-age, and my dad .. well, he only had a high school degree.
About 8 years ago, secured a very stable job making more than the average Canadian household income (note: the average household income is about $75,000).
Throughout that entire time before they got that stable job, they played the lottery. 10, 20 tickets a week, casino trips almost bi-weekly.. it was a drug.
A lottery-fueled addiction and desperate hope that they would AGAIN strike the lottery jackpot.
It sounds extremely ridiculous, because who realistically wins 1, let alone 2 jackpots in their lifetime!?
But that was their financial plan, something I discovered early last year.
I sat down with my parents, explained to them it was improbable and ridiculous to dream like that, particularly since they were nearing retirement quite quickly, and gave them a budget to follow, which they have done quite admirably so far.
My parents are far from being alone. I watched a documentary Lucky, that stated:
Every year Americans spend. [….] $62 billion on lottery tickets.
More than half of all American adults play the lottery making it, by far, the most popular form of paid entertainment in the country.
Odds you believe your best shot at getting rich is winning the lottery: 1 in 5.
Odds you will actually hit the jackpot in a Powerball lottery: 1 in 195,249,054.
LOTTERIES ARE A TAX ON THE POOR
I always think that playing the lottery is like taxing the poor. They willingly do it because they think they’ll be the lucky ones, so they bet their meager earnings on a ticket.
I agree statistically speaking that playing 4 times a year makes sense. Can’t win if you don’t play, but that’s 4 tickets out of 52 in a year you should be buying.
It’s about $20 at a chance to win that you should be spending in a year.
Worst of all, even if you win the lottery, it could turn into a nightmare, here are stories about people who hit it big but ended up regretting it: Unlucky and Tragic Stories of Lottery Winners.
HAVING A DECENT RETIREMENT IS NOT ROCKET SCIENCE
It’s just hard work and changing your mindset to be disciplined enough to save as much as you comfortably can.
You have to have a household budget.
You have to save at least 10% (I like 15% – 25% better) of your net income at the very least.
You have to track your expenses.
You have to be aware of what you’re saving all this money for, like your goals.
You have to understand that life is meant to be lived, but in moderation.
It is not fun, it is not easy and it is certainly not as sexy as being able to do whatever the heck you want with your money.
…but it’s the only way to make it.