Risks of waiting for money that may never come

Apr 09, 2020 | Molly Pederson


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If you are like many of us, you hear of the latest instant millionaire with the most recent lottery jackpot being claimed and your mind quickly races to how you would spend that kind of money. To put that likelihood into perspective the odds of winning the Lotto Max jackpot are one in 33,294,800 per $5 play. This makes the Lotto Max harder to win than lotto 649 which has odds of one in 13,983,816.

While it is fun to dream about what we would do with large lottery winnings, unfortunately it is not something that will become a reality for most of us. Here are a few examples from our office if we were so lucky to win a lottery:

-Brendon: My response to this hypothetical lottery would depend on how much we're talking about.  If it was $1 million it likely wouldn’t change my lifestyle much at all, I’d pay off my mortgage, max out TFSA’s and take the family on a nice vacation!  Now if this was the $50 million jackpot that’s a game changer.  All the above holds true but I’d also be talking with our Wealth Management Services team to discuss things like family trusts, charitable donations or endowments.  I’d likely still continue working, investing my $50 million! 

-Lauralee: semi-retire, invest in a thriving, self-running niche business or fast-food restaurant that requires little effort from me, travel (which would probably involve volunteering to build schools & communities rebuilding after travesty or with wild animals), spend more time exercising, practicing yoga & guitar, visiting friends and family. And I have many other ideas that I am not really firm on yet

-Laura: I honestly haven’t thought much before about what I’d do with a big windfall but here is what I came up with: pay off debt; invest; take a break from work; travel; purchase a vacation property; a dream job would be owning a flower shop/home décor & design boutique or plant nursery…or maybe just work in one and not worry about owning it; give back to charity. When dreaming, ideas are limitless…

-Molly: Priorities for me would be paying down debt, saving for the future and ensuring that enough was set aside for a nice annual family vacation.  If a large jackpot was won, I would consider donating a portion to a number of worthwhile charities that make a difference in our community.

RBC Wealth Management recently posted an article on the perils of waiting for money that may never come.  Surprisingly 35% of Canadians in the survey identified counting on money left behind in a Will to fund their futures. This category of people, known as “waiters”, could be setting themselves up for financial failure.

  • You don’t know what the money will need to do between now and the time it turns into an inheritance
  • There are competing interests: assuming how much money will be received if any

A smarter strategy is don’t wait on something that may never come. Instead, having a financial plan to determine whether your assets will provide the income you require in future years is one of the best things you can do.  Having your “financial house” in order is a good approach for everyone in good times and in bad.