Television advertisements for and about tax preparers began in January. I sat in front of the TV during one of these ads and counted the months between January and April 15th on my fingers, and I figured that I still had some time to rifle through my receipts and to fill out those odious tax forms. While I felt a bit of relief, I also knew what was about to happen to me (because this happens every year). My mind drifts from the IRS and floats into fantasyland. I begin to wonder what it would be like to be a lottery winner ?

First, as my father says, "You can't win until you purchase a ticket." So I need to get up, get dressed, go out in public and purchase a ticket. But, I also need to decide if I want to win that $X million in a lump sum or in annual annuities. In my search for answers to this question, I discovered that each state carries different rules about their payout. For instance, New York decides for you - you are paid in annual sums. In California, you have a choice. But, all these choices would depend upon your age, whether you want to blow the winnings all at once, or if you want to sock money away to earn interest.

Cecil Adams, long-time columnist and self-acclaimed "very intelligent person," wrote a column about the subject of annuities vs. cash payouts online in Straight Dope. Adams stated in this piece that lottery annuity payments in California (and in some other states) pay interest rates, similar to a mortgage, so the following scenario might occur:

"Let's say you win a jackpot of $1,000,000 from the California lottery. The lottery rules say that total will be paid out to you in 20 equal annual payments of $50,000 each. Alternatively, you can take the lump sum cash value, which is about half the face amount, about $500,000. Which should you take? To find out, we need to determine what kind of interest rate you'll be getting with the annuity. Punching a few numbers into my calculator, I find that if we start with a cash value of $500,000 and expect to wind up with $1,000,000 after 20 years (in other words, the equivalent of a $50,000 annuity), the underlying annual interest rate has to be 8.92%."

Adams then states that the annuity is a much better deal - that he didn't know where he could find a guaranteed 8.9% annual interest rate for the next 20 years. Granted, the stock market historically returns anywhere from 9% - 11% interest on capital, but that return isn't guaranteed. However, placing my funds into a portfolio is a reality, whereas winning the lottery is a daydream.

But wait - it does happen. I mean, people - ordinary people - win the lottery, and my chances of being ordinary and winning are just as good as theirs, right? So if I win the lottery, will I be happier? Although I think I might be happy with a few million dollars in my back pocket, I'm unsure whether I would resent the fact that the government would consume half my winnings. Beyond this, would millions of dollars really change my lifestyle/attitude?

Camelot Group Plc, operator of The UK National Lottery, released a major survey (PDF file) about that country's National Lottery winners to discover what effects the lottery really had on the winners' lifestyles. While this survey isn't focused on American attitudes, it still gives a glimpse into the psychological ramifications involved with winning over ?1 million or more. That ?1 million translates roughly into $1,745,162,342 in American dollars today...

This survey shows that a large majority of winners invested their winnings in property or in the stock market. Also, 87% of the winners were employed before they won, and just 25% of that 87% still work. But, a full 1/3 of the winners started their own businesses or bought into existing businesses upon their wins - another investment of sorts. New cars, which are not an investment since they lose value as soon as they're driven off the car lot, are valued by lottery winners. New homes or residences are also a priority, although most of the winners moved less than 20 miles from their previous home site.

And, it appears that the winners are satisfied, if not exuberant, that they could live a stress-free life filled with financial security. They're so happy that 98% of the winners have given a portion of their winnings to family members. What this survey doesn't explain is that, perhaps, these gifts were tax benefits for the winner. These gestures, however, have created an additional 728 more millionaires in that country (more taxpayers with more money!).

Another study by H. Roy Kaplan states that winning the lottery doesn't change people's lives as much as is imagined. Kaplan interviewed over 600 winners of more than $1 million in the U.S. He found that while people were catapulted from one economic status to another overnight, a lifetime of beliefs and experiences change more slowly. "People who were outgoing and gregarious before winning took it in stride," Kaplan said. "People who were shy and withdrawn before winning became suspicious and paranoid."

Back in the U.K, the BBC noted that money can't buy happiness, especially among Americans. They wrote about a 2001 study by American psychologists which showed that "excessive wealth, particularly for people unaccustomed to it, such as lottery winners, can actually cause unhappiness." In another article produced by the San Francisco Chronicle in 2002, Tom Grey, spokesman for the National Coalition Against Legalized Gambling, stated that Virginia state lottery officials found in 1999 that of 300 millionaire lottery winners, as many as 60 eventually encountered financial problems.

After enduring this fact-finding mission into one of my favorite fantasies, I wondered if I'd be satisfied with a new car and a new residence located about 20 miles from here while I monitor my new and unknown financial consultant. I think I'll stay in my jammies, begin to sort out those receipts, and continue to drop that lottery money into my online portfolio, because I don't feel like becoming more paranoid, less happy, and more in debt.

Until Next Week,
Linda Goin