Can you Retire after a Big Lottery Win?

We all dream of winning a huge lottery prize that allows us to retire from our work. How much do we need though to be able to do just that?

Friday October 14 saw two tickets share the massive $494 million Mega Millions jackpot. Retirement is definitely on the cards for those winners but that’s not always the case with big winners.

When that lottery success comes along, it is easy to let your spending go out of control. Sadly, there are many stories of big winners who years later have spent all their windfall. That's why getting financial advice is so important.

Robert Pagliarini is the President of Pacifica Wealth Advisors.He advises lottery winners on how to cope with their new financial future. His belief is that you need around $5 million (£4.4 million) to be able to retire.

Factors to consider

There are many factors, claims Pagliarini, that determine how much is needed. These include the age of the winner, where they live and how much tax might be needed to be paid. Their current savings also has to be considered. “There’s limitless numbers of variables,” said the financial advisor.

Make investments

 Part of any big lottery win should be invested. The money raised from those can “yield enough returns for annual withdrawals at least equal to your current annual salary.” This shouldn’t exceed 4% of your winnings, says Pagliarini. You can see therefore why getting financial advice is such a good idea.

His general advice is to take your current salary and multiply it by a figure between 70 and 100. He prefers 100x because that gives a lottery winner “a cushion.”

This will give a lottery winner a good indication of how much will be needed over the next few decades. Of course, that figure only applies if you stick to your current spending rate.

It’s understandable that a lottery winner will want to buy a new home, a new car and help their family. After that though, spending levels can settle down and that would make retirement a possibility.

Buy tickets today from Lottery24.