How is Retirement Like Winning the Lottery?
It's not a connection you will likely make. I didn't either, until I saw an article in Daily Finance, "Why Retirement is Like Winning the Lottery."
Unless you really think about it, it's hard to put two and two together but they are more alike than you think:
- You're kind of lucky. Not everyone that buys a lottery ticket will win the lottery, just like not everyone who works to retire later on, will be able to retire fully by the time they plan. In fact, the amount of retirees with concrete retirement plans have declined at least 20% since the 1970's.
- You got to be in it to win it. Everyone wants to win the lottery. How do you win? You buy a lottery tickets and hope that the numbers that are picked are the ones you chose. The same goes for retirement...if you don't invest in the resources that will help you win at retirement, chances are, you won't. Invest some to get some back, that's how it works.
- You suddenly have a lot of money. I'm not saying that you will have lottery sized amounts but, with the right planning, you might have enough or a substantial amount to live off up during retirement. Just like the lottery though, you have to decide what to do with it. Chose wisely.
- You're on your own. Now that you have money for your retirement, don't squander it. It's up to you to make sure that money last throughout your retirement or you'll be in a tough spot. Retiring, or winning the lottery, should be a good experience, but don't oversell yourself so quickly, it might lead to disaster.
- Don't forget your taxes. Just like lottery winners have to pay taxes before they have access to the complete bulk of their money, retirement income is subject to regular income tax. In addition, under certain instances, Social Security is subject to federal income tax as well.
- You have to adapt to a new lifestyle. In with tune with lottery winners who move on to greener pastures and make drastic lifestyle changes, retirees will have to adapt with a life without a job, work to maintain old relationships and deal with the possibly of downsizing. It's a big change but it can be managed.
The article concludes with a sage piece of advice:
"The new retiree has a lot in common with a lottery winner, but there is at least one major difference. If you buy a lottery ticket, you have a minuscule chance of winning. If you contribute to your retirement account, you're bound to win."
I completely agree. Planning for retirement has fallen by the wayside but it's time to pick up the slack. It's not going to be as easy as it used to be, but that doesn't make it impossible to achieve either. it's all about preparedness and how much time you are willing to spend making your retirement as smooth as possible.
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