Aug. 16, 2013 – “I’d quit my job” – usually the first words you’ll hear when someone daydreams about winning the lottery, but how true is that claim?
A Gallup poll from early August shows that for many Americans, work wouldn’t seem so bad after winning a lottery prize of $10 million. In fact, 68 percent of the 1,039 Americans surveyed said they would continue working, while only 31 percent said they’d give themselves an early retirment.
Gallup’s “Work and Education Survey”, which was conducted from Aug. 7-11, took a cross-section of American adults – all age groups, races, levels of education and geographic locations – and posed the $10 million question: work or quit?
This is the third time Gallup has asked this question, but the first time since the 2008-09 recession rocked the U.S. economy. According to their results, more people said they’d keep working now as compared to the three previous surveys.
44 percent of Americans would keep the job they have now, while 23 percent would go looking for another place to work, according to the poll.
Gallup said there is a “value [that] American workers appear to place on working,” citing as a real-world example Sue Nickel, a 63-year-old municipal worker among “Ocean’s 16,” the group that claimed a third of the recent $448 million Powerball jackpot.
Nickel told reporters that she planned on telling her husband to retire, but would keep working for at least another year herself.
In fact, all but one of “Ocean’s 16” said they’d keep working. A reporter caught one of the workers climbing into his car after their press conference and asked why they’d all keep working. His answer: “that’s what we do.”
But dedication may not be what’s really keeping people on the job. Gallup notes that “the perceived value of winning $10 million may be less now than in [the] past.”
Whether it is inflation or more information about how lottery prizes are taxed, “some workers may …think they… would need to work in order to meet their financial goals.”
It’s important to note the difference between Sue Nickel and the Minnesota winner of the same Powerball jackpot – Paul White – who said he’d “never work for anybody ever again, for a paycheck at least.”
While White was able to claim a lump sum prize of $86 million all for himself, Nickel and her 15 co-workers split the same amount, each netting about $3.8 million after taxes.
$82 million is a pretty clear difference when it comes to early retirement, but for the people in Gallup’s study, with a hypothetical $10 million prize, how realistic would it be to call it quits?
According to a TIME business article from March 5 entitled “Why Many Americans Feel Like They’re Getting Poorer“, working Americans feel like a dollar doesn’t go as far as it used to, simply because it doesn’t.
Despite businesses gaining steam and turning profits, wages for American workers have slipped while prices for everyday goods have risen.
Michael Sivy, the TIME business writer, cited several different measurements of growing prices facing Americans. While the Consumer Price Index has risen only slightly in the past few years, other indicators have gone up significantly.
Reuters’ Commodity Index, which measures raw materials and energy, has risen about 38 percent in the past four years. Taxes too have jumped, Sivy reported an increase of 35 percent on Federal, State, and local taxes.
For the hypothetical lottery winners that Gallup surveyed, a $10 million prize would skyrocket them to the top tax bracket as well, making them liable to pay a 39.6 percent effective tax rate.
So how far would $10 million go? If you won a $10 million lottery prize, you’d first have to choose the lump sum or annuity.
The annuity – about $345,000 a year – would certainly put your income in the second-highest tax bracket, so you may still fall into the highest when you add your yearly income.
The lump sum varies based on the game you’re playing, but based on cash values for Mega Millions and Powerball jackpots, you’d be looking at about $5.8 million before taxes.
If you put the whole check in the bank, it would earn $58,000 each year in interest – but let’s face it, you’re not going to put it all in the bank.
You might buy a new home or pay off your mortgage, settle your debts, buy a new car, and take a vacation after winning. Even with $5 million, workers under 55 years old would need to collect interest for a number of years before living a truly lavish lifestyle.
Perhaps that’s why 82 percent of workers aged 18 to 34, and 67 percent of workers between 35 and 54, said they’d keep working, in some capacity.
Even 50 percent of people at the tail end of their careers, 55 years old or older, said they’d keep working after hitting that “big” $10 million prize.