Massachusetts man wins $1 million lottery — but ends up losing over $300,000 because of one decision
One stroke of luck is all it takes for a person to hit the jackpot, but then a small mistake can rob them of a fortune. A lottery winner beat astronomical odds and became a millionaire overnight, only to make a bad decision that would result in a loss. Michael Koldys from Sheffield, Massachusetts, got the surprise of a lifetime when he became a millionaire after scratching a $20 scratch ticket for the $5,000,000 100X Cashword game. He was the second winner of a $1 million prize from the lottery game within a week. However, he was able to walk home with only a fraction of his winnings.
Like all winners, he had to choose between taking the cash in a lump sum or receiving it in installments. Koldys decided to opt for the one-time payment and got $650,000 before taxes. By opting for this, he sacrificed over $300,000 of his winnings. But despite the sizeable loss, Koldys doesn't seem disappointed and has big plans to buy a new boat, save for retirement, and have some fun with his prize money. The store that sold him the ticket, Silk's Variety, is also set to receive $10,000 cash as a reward for selling the winning ticket.
According to investment fraud attorney Andrew Stoltmann, it's generally recommended that lottery winners accept their cash in installments over time. "The reason for that is because the average lottery winner comes from a socioeconomic background where they usually don’t have the infrastructure set up to handle a massive $100 million+ payout," he told CNBC Select.
However, not all lottery winners have a financial advisor to guide them after winning a huge sum of money. "We see common mistakes made by the winners who take the lump sum distribution," Stoltmann says. "If you take the distributions over 25 years, you can make those common mistakes the first couple of years and still have most of the money left over."
What is the best way to collect and spend lottery winnings?
It might be overwhelming to suddenly be in charge of a huge sum of money. However, it's best to try and look for ways in which you can make the most of the cash available. Perhaps you could start a new business or maybe invest in one. According to Stoltmann and other financial experts, it's best to avoid spreading the news of your winnings as people can soon approach you seeking handouts. The next best thing is to assemble a financial team consisting of a financial advisor as well as a CPS, and a lawyer. Another wealth advisor Robert Pagliarini also advised against taking the lump sum amount. "Lotto winners would be far better off if they chose the annuity," he told The U.S. Sun. “If you take the lump sum, you have to realize that if you start making mistakes, or bad investments, there’s no do-over, it’s not like you are going to win the lottery again. You have one shot at this," he added.
