The Lottery is Not a Retirement Plan

When I was about 10 or 11 years old, we took a weekend trip up North to visit family with some relatives. One relative was a feverish lotto player. Scratch tickets were her go-to medium.

We had stopped at a gas station where I asked to get a scratch ticket of my very own. The adults seemed to have fun with them, I wanted one too. Problem is, 11 year olds can't buy scratch tickets. So, my relative bought me one. 

I remember the tiny rush of excitement as I scribbled my penny across the grey scratch-off stuff....the flakes flying everywhere as my fate was revealed.

And you know what? I WON. I won a LOT. $500 a lot. For an 11 year old, this was HUGE. 

My excitement was short lived when the relative played her trump card: she had purchased the ticket, so the winnings were hers. She did give me $5 though for being a good sport. 

It was one of my first lessons in how crappy the lottery is. Not only does it turn people into money-hungry maniacs, but the odds are garbage....and life isn't fair. 

I never willingly played the Lotto again. Every year I'd get some scratch tickets in my stocking at Christmas....and I'd begrudgingly scratch them off...and win nothing. I couldn't help but think "What a waste" as I tossed the ticket in the garbage. 


One year I happened to be driving through Vegas and my distaste for the gambling offered there was similar. Sticking my hard-earned (and limited) funds into a machine "in case" I may win something back seemed really futile....and not much fun. 

Yeah, I'm a bag of laughs to have in Vegas, I tell ya : ) 

The problem with the Lottery is that the MARKETING makes you believe that not only do you have a chance at winning (albeit a 1-in-175 million in most cases) but that all your problems will vanish and your wildest dreams will come true if you JUST. KEEP. PLAYING.  It's a ploy. Spend your hard-earned money and hopefully, eventually, you'll get Willy Wonka's Golden Ticket.

Here are some more considerations regarding the Lottery that keep me away from scratch tickets, Powerballs, and all manner of gambling in general:

1. It Doesn't Do Anything For Financial Fitness

In fact, a study done on Florida Lottery winners found that 70% of them had gone broke within 5 years of winning. So, bestowing large winnings on people who can't handle money = bad idea.

Dave Ramsey has a quote stating that the "Lottery is a tax on the poor and those who cannot do math" and there's some major statistical proof to this. According to a study performed at the University of Buffalo, those in the lowest fifth in terms of socio-economic status had the highest rate of lottery gambling (61%).  Lottery sales soar in disadvantaged neighborhoods as opposed to wealthier ones. 

The Lottery preys on the hopes of the downtrodden. It wants you to believe that with just an investment of a dollar or two, your entire life trajectory can be changed. It exploits the poor's overwhelming desire to escape their situation.

The problem is, life just doesn't work that way.

2. Throwing Money Out the Window is Not a Fun Hobby

One thing a lot of people say is they play the Lotto "for fun" or for a thrill. I mean, I kind of get that....I guess. I like to take risks.....I like to risk starting new ideas or businesses....I like roller coasters...I'm not risk adverse. However, given the cruddy odds, the short-term "high"....and the low that comes from staring at a stack of worthless tickets that paid out nothing....then wondering what else could have been done with the money you spent to buy them, I guess I'm not seeing the "fun" aspect. (Again, I'm a fun gal! I promise!)

When the Jackpot hit ridiculous proportions this past winter, I witnessed so many people lining up to purchase tickets that looked as if they really couldn't spare the $2 at the time. The hope in their eyes was a bit disheartening. They truly believed they could win.....even though the statistical probability was nil. 

"But Pudgy, you can't win if you don't PLAY....."

Or can you???.......

3. I Like Sure Things

In the 43 states where the Lotto is legal, Americans spent $70 BILLION DOLLARS on Lotto games in 2014. 

SEVENTY. BILLION. (CNN Money)

Tell me now why we can't have nice things : ) 

Think of how much, on average, people in Wisconsin may plop down on lottery tickets per year. Let's say it's $50 a month. That's being pretty conservative, honestly. Some of those big scratch tickets are $5-$10 a piece.  But, $50 a month is where we'll go.....

That's $600 a year.  
Let's say instead of buying Lotto tickets, you decide to invest in a series of growth stock mutual funds with your $50 a month instead. 

Let's say those funds yielded an average of 8%. This is, again, being rather conservative. I have some funds that do MUCH better (and some that, like this year, tank....but the market will always rebound). If you want excitement in your life, watching your investments grow and change....that's fun! 

Now let's say interest compounds quarterly. From age 25 to 60 your paltry little $50 a month will have earned roughly $170,774.00.

Not too shabby. Think of what it could do if you doubled that? 

$100 a month. 

That's about $341,000 at 60 years old. Even with a tiny bit of investment. Now, think of how thrilled you would be if you hit the Lotto at $341,000 after playing for years and years. 

Here's how it can happen.

But, by all means.....keep lamenting that you never win the Lotto. Rejoice over the $100 you won that took $500 to get to. 

Compound Interest is the game that so many people are not playing : ) The odds? FAR BETTER.

Jeez, Pudgy Gazelle....you sound about as fun as a 4 hour lecture on nuclear physics. 

Gambling IS fun to a lot of people....I'm just writing to show that even if it's how you like to spend your time and hard-earned cash....it's not a good retirement plan. It's not a means to achieving financial freedom....and the math is REALLY bad. 

I challenge you to try the Compound Interest Gambling Game for at least a year. It may be hard, to give up your weekly or sometimes DAILY scratch ticket.....but humor me. Invest those Lotto-Spendings and see what happens. If you're not ready to take on investing, sock it away in a savings account and see how it grows. 

I guarantee you, in a years time....well...you'll feel like you won the Lottery  ; )