“Riches Beyond the Dreams of Avarice”
This expression is a well-known line in Star Trek IV, The Voyage Home, but it is attributed to the 18th Century poet and essayist Samuel Johnson. (1) It is a wonderful quote; poetic in its flow: But what does it mean to say a person has “riches beyond the dreams of Avarice.” Webster says it means that one has more money than even someone obsessed with the pursuit of wealth could dream of. Avarice being one of the seven deadly sins. (2)
On July 19th the Powerball Jackpot hit $1 Billion, the Mega Millions Jackpot seems to be on that same track. No one matched all six numbers in the Tuesday, July 25th drawing for $820 million, so the jackpot rolled over to $910 million overnight, it could easily top a Billion by the drawing on the 28th.?To try and put it in perspective a Billion is 1,000 million; that is, a million dollars 1,000 times over. President Regan said, “A 4-inch stack of $1,000 bills equals $1 million.” (3) Following this formula, a Billion dollars equals one thousand stacks of $1,000 bills four inches high or four thousand inches of $ 1,000 bills. Four thousand inches equals 333 feet, just a little taller than the Statue of Liberty at 305 feet. (4)??Winning a stack of $ 1,000 bills taller than the Statue of Liberty, talk about the dreams of Avarice.
Imagine being one of the lucky few who wins such a stack of money and becoming instantly rich beyond your wildest dreams. In the blink of an eye, anything your heart desires is suddenly within your grasp. With such wealth you would never need to worry about money again… right? Right?
Perhaps Not. There are all too many tales documenting the sudden incredible wealth bestowed upon those lucky few and the subsequent flaming ruins their lives become. One thing many unhappy lottery winners have in common is taking advice from less-than-knowledgeable people while being swayed by greedy friends and relatives. Take Jay Sommers. In 1988, he won some $5 million in the Michigan state lottery. In a July 2022 interview with Michael Kaplan of the New York Post Sommers said “There ain’t no money left,” Sommers, now 54, told The Post. “Everybody expected money from me, I had uncles expecting and friends all wanting money, I don’t even speak to them anymore.” (5)
Between pushy family members and strangers with get-rich-quick schemes, it can be tough for lottery winners to stay solvent. Robert Pagliarini, author of “The Sudden Wealth Solution” and founder of Pacifica Wealth Advisors, has worked with a handful of lottery winners and received calls from dozens who fail to follow through.
Part of the problem, he’s come to believe, is an unrealistic expectation of what can be done long term for the money they have. “You go from zero to a million and think you’re rich,” Pagliarini said. “Then a financial planner tells you that the money should be invested, and you can conservatively receive $2,000 a month for the rest of your life. Then the winner says, ‘What are you talking about? I’m a millionaire.’ After that conversation, he goes off and spends all his money.”
Michael Minter, a financial adviser is quoted in the Post saying: “I’ve seen the newly rich spend $200,000 on two weeks of partying and eventually having their Bentley repossessed.”?Meanwhile, boneheaded investments can be their own forms of blowing dough. “I had a suddenly wealthy client invest in a pay-phone company when everybody had cellphones, he lost his money on that one.”
Minter points out that whoever wins the billion-dollar lottery on Friday should do everything possible to slow the deterioration. One way to do that is to put a limit on outgoing cash flow.
“In strictly financial terms, it’s a better deal to get your money in one lump sum,” he said. “But for people who are not financially sophisticated, the annuity [spread through 30 payments over the course of 29 years] allows you to make financial mistakes without going broke. You can mess up every year and then get to start over again, with a fresh infusion of money, the next year. I’m hopeful that by year seven or eight, they figure things out and make good financial decisions.”?Sound familiar?
Now I frequently deal with Million Dollar not Billion Dollar settlements. Even so the risks, the pratfalls and lessons are the same. From time to time over the course of my career, I have seen some plaintiffs with horrific debilitating injuries pass up the security of a guaranteed tax-free income for life in favor of cash now. The lure of sudden money, it's got a very strong appeal. It's a losing proposition but one they can't refuse. Off they sail out into the blue with no experience whatsoever and no plan for how to manage their settlement proceeds. Unfortunately, all too many have found out just how fast the money can disappear.
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Do you have a case with claimants who could use some time to figure things out and make good financial decisions. Contact Frank C. Kilcoyne, CSSC at 800.544.5533 or [email protected]. I am here to help.
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Sources:
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?1.https://ethereal-ephemeral.blogspot.com/2012/10/riches-beyond-dreams-of-avarice.html
?2. https://www.phrases.org.uk/bulletin_board/17/messages/158.html
?3. https://www.upi.com/Archives/1981/02/19/President-Reagan-says-a-trillion-dollars-is-a-???stack/8277351406800/
?5.https://nypost.com/2022/07/29/these-lottery-winners-lost-it-all-after-hitting-t