How A Lottery Ticket Can Fit Into Your Retirement Plan

A few months back, the Mega Millions lottery jackpot exceeded $1.5 billion.  And I – a financial planner with a master’s degree in finance from a top university and almost 20 years of experience advising clients – bought a ticket.

In his seminal 1776 work, “The Wealth of Nations,” the great economist Adam Smith used the word “folly” when discussing lottery players and as far back as 1662 English economist Sir William Petty wrote that “A Lottery therefore is properly a tax upon unfortunate and self-conceited fools.”  Why then, knowing all this, am I suggesting that a lottery ticket might have a place in your retirement planning? Why did I buy a ticket?

Let’s get one thing out of the way: it is not because I think you have any great chance of winning.  Certainly not enough of a chance that you should plan to rely on any winnings to achieve your financial goals.  To do so would indeed be folly and foolish.

Rather, let me tell you about the rest of my evening after I purchased the ticket.  That evening, my wife Liz and I went out for a nice Italian meal together.  As we were waiting for our food and enjoying the freshly baked bread our waiter placed on the table, I mentioned that I had purchased the ticket and the rather historic size of the potential jackpot.

“What would we want to do with the money?” she asked.

And that was exactly what we talked about for the rest of the evening.  Where would we live?  How would we spend our time once “work” was no longer a necessity? How would we educate our children?  What causes and organizations would we support?

It was an interesting and gratifying discussion, and as we were packing up our leftovers into “to-go” bags it occurred to me that we had spend an entire evening discussing Geroge Kinder’s first question of the life planning process.  The Kinder Institute of Life Planning recommends asking three values clarifying questions at the start of any life planning process, and question #1 is:

I want you to imagine that you are financially secure, that you have enough money to take care of your needs, now and in the future. The question is, how would you live your life? What would you do with the money? Would you change anything? Let yourself go. Don’t hold back your dreams. Describe a life that is complete, that is richly yours.[1]

 Liz and I had spent an entire evening answering Kinder’s first question without even knowing it – all because I purchased a $2 lottery ticket. (A sum considerably less than a certified life planner would have charged to facilitate this conversation!)

I often encourage people who are starting their financial planning journey to begin in the same way that they would begin any journey: by knowing where they are going.  What this means in practice is that we spend a fair amount of time discussing their goals in life.  At the most basic, all financial planning decisions are about allocating the scarce resources of money and time today to give you the greatest amount of satisfaction in life, both today and into the future.  By understanding your goals, you have a way of measuring your financial success against more than just the dollars and cents on your statement. 

Of course it goes without saying that my wife and I did not win the $1.5 billion lottery this week.  But even the vanishingly small chance that we might have made our conversation about how we would live our lives without worrying about money real enough to allow us to spend an entire evening discussing what that life would look like in great detail.

When I was growing up, the slogan of the New York Lottery was, “All it takes is a dollar and a dream.”  As a financial planner, my job is to help you turn your dollars into your dreams – without the help of gambling!  The organizations that Liz and I would support in a big way if we had won, we can support today in a way that is within our means. The places we would live in if money were no object?  We can plan a vacation trip to get a taste of what that life would be like. And we can work to make sure that the way we spend our time – both in and out of work – is as meaningful and fulfilling as possible.

The more our lives today resemble what they would look like if we had won the jackpot, the more we are currently living our values.  Deep conversations about values are difficult to have, and can be uncomfortable.  But if a $2 lottery ticket can help you get started, then it is money well spent and absolutely can fit into your financial plan.

Just perhaps, not every week!

[1] George Kinder’s first question is copied here from public sources.  I am not a Registered Life Planner nor have I attended training at the Kinder Institute of Life Planning.