In 2022, California became home to its first lottery billionaire. The state’s lottery revealed that a gas station in Los Angeles County sold the single winning Powerball ticket for the draw’s record $2 billion prize.
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This anonymous Powerball billionaire experienced a rare experiment in unexpected, swift wealth accumulation that is virtually unparalleled — and with a new high-prized Powerball on the horizon, many people wonder what they would do if the prize fell on their lap.
Robert Pagliarini, a seasoned wealth advisor and author of “The Sudden Wealth Solution,” provided some valuable insights on how to manage this kind of immense wealth.
Upon learning about the Powerball billionaire in California, Pagliarini voiced his awe, “It’s sick. It’s ridiculous levels of wealth,” he stated to The Atlantic. His concern, however, is less about the wealth itself and more about the psychological implications of coming into such an enormous fortune unexpectedly.
Similarly, those who have sold businesses for billions have a supportive network of financial and legal professionals to lean on. This makes the journey of the Powerball billionaire truly unique.
When asked about whether a winner should opt for a lump sum or an annuity, Pagliarini expressed his preference for the latter with The Atlantic. He said, “I’ve been a big proponent of taking the annuity for years. What the annuity gets you that the lump sum does not is the ability to make mistakes and to recover from them.”
He explains that with the annuity, there is room for learning and growth. Winners can make financial missteps in one year but will still receive another deposit the next year, allowing them to learn from their mistakes and improve their financial management skills.
Aside from the tangible financial aspects, Pagliarini believes the greatest challenges for lottery winners are psychological. “I tell people that, with sudden wealth, especially a lottery, there are two emotions after you win,” he explained. “And the first is this sense of joy and excitement and jubilation. But that is quickly followed by this sense of, Oh my God, I don’t know what I’m doing.”
When it comes to managing newfound wealth, he states again to The Atlantic, saying, “It’s like 99 percent psychological and 1 percent financial.” He emphasizes that while the financial side of managing wealth is pretty straightforward, dealing with the psychological ramifications is where the real challenge lies.
The wealth manager also warns about the potential strain on relationships after a lottery win. The people around the winner often change their behavior, creating an uncomfortable dynamic.
He referred to the notorious “lottery curse,” where winners often feel their relationships become strained or even destroyed due to others’ altered attitudes and expectations.
Ultimately, Pagliarini advises winners to establish a team of financial and legal advisors before making any drastic decisions. “Let’s get the tax person and get the legal person lined up,” he suggests. But perhaps the most significant piece of advice he imparts to lottery winners is this: “Sign the ticket. Take a photo with it. Take a video with it. Tell one trusted person. Don’t tell anyone else.”
While the vast amount of wealth from a Powerball win can be exhilarating, it’s essential to approach it with caution, prudence, and professional guidance. Understand that it is more than a financial journey; it’s a psychological one that can impact every aspect of life.
Whether you opt for the annuity or the lump sum, remember the sage advice of wealth manager Robert Pagliarini — managing sudden wealth is primarily a psychological game, and one where the right preparation and mindset can make all the difference.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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