How Many Lottery Winners Go Broke? (Surprising Info)

“How many lottery winners go broke?” is a startling question. Surprisingly, it’s estimated that nearly 70 percent find their fortune slipping through their fingers. Here, you’ll find out the statistics and sad stories of people who went bankrupt after hitting the jackpot.

Let’s begin!

How Many Lottery Winners Go Broke? Key Statistics

• High Spending Rate: A study in Florida revealed that 70% of lottery winners had spent every last dime of their jackpot within five years of winning​​.
• Bankruptcy Rates: Some sources indicate that one-third of lottery winners go bankrupt, while others suggest it could be as high as 70%​​​.
• Investment and Spending Trends: Only 37% of lottery winners invest their winnings to continue receiving dividends. More than 20% use their winnings to buy a house. A similar percentage first takes an expensive vacation before considering debt repayment or investment​​.
• Specific Study Findings: A Vanderbilt University study analyzing almost 35,000 lottery winners in Florida found that 5.7% of them were bankrupt within five years of winning. This study focused on winners who won $600 and upwards​​.

Tragic Tales of Lottery Winners Going Bankrupt

Media often highlight the stories of lottery winners who are now living ordinary lives. Let’s look at some famous ones:

Jack Whittaker: The Tragic Millionaire

Jack Whittaker of West Virginia won a $315 million Powerball jackpot on Christmas morning in 2002. It was the largest jackpot ever at the time. However, Whittaker’s story rapidly turned tragic.

His excessive generosity led to a series of thefts. His granddaughter and daughter died under suspicious circumstances. After all of this, his marriage fell apart. By 2007, Whittaker declared he was broke.

Callie Rogers: Too Young, Too Rich

In 2003, Callie Rogers became the UK’s youngest lottery winner at the age of 16. She scooped up a jackpot of nearly £1.9 million.

Rogers spent her fortune on plastic surgery, designer clothes, lavish parties, and drugs. She also faced violence from her partners and was left nearly penniless.

Abraham Shakespeare: From Luck to Loss

Abraham Shakespeare, a casual laborer from Florida, won $30 million in 2006. He rapidly attracted a series of opportunists who wanted a piece of his fortune.

The worst of these was Dorice “Dee Dee” Moore, who tricked him out of his remaining money and then murdered him in 2009 to take full control of his assets. Moore was later found guilty of his murder and is currently serving a life sentence. So, if you were searching for Lottery winners death statistics, then note that it’s not zero percent.

See More: How Many People Win The Lottery Each Year?

Why Do People Go Bankrupt After Winning Lottery?

A lot of my readers have asked me, “Why do lottery winners go broke?” Well, people usually go bankrupt after winning money because of the Sudden Wealth Syndrome. They buy big houses and cars without worrying about the future. Many also make bad investment choices. Some don’t feel the need to get financial advice and end up losing all their money.

Let’s see the details of the biggest mistakes lottery winners make:

Sudden Wealth Syndrome

One of the big reasons is something called “Sudden Wealth Syndrome.” Think of it like this: one day, you’re counting pennies, and the next day, you have millions in your bank account. It sounds great, but it can mess with your head. Many people get overwhelmed and start making bad decisions.

First, they might buy things without thinking about the long term. Fancy cars, big houses, and luxury trips can eat up money really fast. Next, some people quit their jobs and think they can live off their winnings forever. But even millions can run out if you’re not careful. The money seems endless, but it isn’t.

Also, managing a lot of money is hard work. If you’re not used to it, you can make mistakes. Some people try to invest in things they don’t understand and end up losing money. Others just let the money sit and don’t think about how to grow it wisely. Being suddenly rich can be more stressful than people think.

Gifts and Loans

Another trap people fall into is giving away too much money. Friends, family, and even total strangers will start asking for help. It’s hard to say no, especially when you’ve got more money than you’ve ever had. But gifts and loans can add up. Soon, you might find you’ve given away half your winnings.

And don’t forget, not everyone will pay you back if you loan them money. It’s good to help others, but you have to be careful about how much you give away.

Besides, having a lot of money can change your relationships. People might start treating you differently or expect you to pay for everything. This can make you feel isolated and could lead to more spending as you try to maintain friendships, adding to your financial strain.

Taxes

In the United States, lottery winnings are considered income, which means you have to pay a hefty sum. Depending on where you live and how much you win, this could be almost half of your winnings.

Many people forget to set aside money for taxes or think they can dodge them. This is a big mistake. When tax time comes around, they find out they owe a lot more than they thought. Some even have to sell their new homes or cars just to pay the tax bill.

Also, even if you wisely invest your winnings, any profit you make from those investments is also taxable. So, you might end up with an even bigger tax bill in the future if you’re not careful.

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Lifestyle Inflation: One of the Biggest Negative Effects of Winning the Lottery

Winning the lottery often leads to a huge lifestyle change. But the cost of maintaining this new lifestyle can be challenging. Higher living costs, such as property taxes, utilities, and maintenance on a large home, can add up quickly.

No Financial Advisor

A financial advisor can help you plan, invest, and manage your money in a way that makes it last. Sadly, many lottery winners skip this step. They believe they can manage their finances themselves or simply don’t think it’s necessary. This is often a critical mistake.

A good financial advisor will help you figure out what to do with your money. This includes how to invest it, how much to save, and how much you can afford to spend. They can also help with tax planning, which, as we mentioned earlier, is a big deal for lottery winners.

Divorce and Family Issues

Winning the lottery can cause stress and tension between couples, leading to divorce, which can be expensive. The division of assets could mean you lose half of your winnings. If you have kids, there may be child support payments to consider as well.

Not just divorce but family issues in general can be a financial drain. Family members may feel entitled to a share of your winnings and may even take legal action to get it.

How To Avoid Going Broke After Winning the Lottery?

Remember that there are many lottery winners who are still rich. But how to not go broke after winning the lottery? I suggest seeking professional advice immediately after winning. Financial advisors, accountants, and lawyers can provide essential guidance on how to:

• Manage the money
• Invest smartly
• Navigate any legal issues that may arise.

Lottery Winners Who Are Still Rich? The Details

Here are some lottery winners who have managed to stay rich:

• Cynthia P. Stafford ($112 million, California): After winning in 2007, Cynthia used the money to resolve her financial issues and start a film company​​.
• John and Lisa Robinson: Won a Powerball jackpot of $327.8 million in 2016. They invested in real estate, buying a luxurious lakeside home in Tennessee.
• Pearlie Mae Smith ($429 million, New Jersey): Pearlie and her family won in 2016 and spent their winnings wisely, establishing the Smith Family Foundation to improve life in Trenton, New Jersey​​.
• Paul and Sue Rosenau ($181.2 million, Minnesota): This couple won in 2008 and established The Legacy of Angels Foundation to help with Krabbe disease research and aid.
• Mark Brudenell: Won £900,000 in 1997, invested in a double-glazing business and owns a family home.
• Mofijul Rahima Sheikh (INR 10 million, India): Mofijul’s win in India allowed him to buy a house and support his family, significantly improving their quality of life​​.
• Sue Herdman: Won £1.2 million, became a pig farmer, and now owns a successful pig farm in northeast England.

How Many Lottery Winners Have Been Murdered? Popular Names

Several lottery winners were tragically murdered:

• Abraham Shakespeare (Florida, USA): After winning $30 million in 2006, Shakespeare was murdered in 2009 by Dorice “Dee Dee” Moore, who had offered to manage his remaining funds​​.
• Tiffani Hill (California, USA): Hill, who won over $2 million in 2020, was murdered eight months later by her husband.
• Craigory Burch Jr. (Georgia, USA): Burch won $434,272 in 2015 and was murdered two months later during a robbery​​.
• Jonas Lucas Alves Dias (Brazil): After winning over $9 million in 2020, Dias was kidnapped, severely beaten, and eventually died from his injuries in 2022​​.
• Jeffrey Dampier Jr. (Illinois, USA): Dampier won $20 million in 1996 and was murdered in 2005 by his sister-in-law and her boyfriend, motivated by the desire to get his money​​.
• Urooj Khan (Illinois, USA): Khan won $1 million in 2012 and died under mysterious circumstances just hours after receiving the winnings.

Bottom Line

In summary, winning the lottery is not always the ticket to an easy life that many people imagine it to be. The stories of lottery winners going broke are a reminder that money, especially when it comes in such sudden and enormous quantities, can bring unexpected challenges and complications.

It’s crucial to hire a financial advisor to avoid spending unnecessarily and keep the money wisely.