Where does the "70% go bankrupt" figure come from?
It's usually credited to the National Endowment for Financial Education (NEFE). NEFE has said publicly that the figure came up during a think tank it held in 2001, that the statement "was made independently and without verification from NEFE", and that the statistic "is not backed by research from NEFE, nor can it be confirmed by the organization." In other words, it's a remark that was repeated until it sounded like a finding.
What do the studies say about lottery winners and bankruptcy?
The most cited study is "The Ticket to Easy Street? The Financial Consequences of Winning the Lottery" by Scott Hankins, Mark Hoekstra and Paige Marta Skiba, published in the Review of Economics and Statistics in 2011. The authors matched Florida Lottery winners to bankruptcy records and compared people who won $50,000 to $150,000 with people who won small prizes. Because who wins a lottery prize is random, the comparison isolates the effect of the money itself.
Their conclusion, in the paper's abstract, is that such transfers "only postpone bankruptcy rather than prevent it." The bigger winners were less likely to file in the first years after the win, but the gap closed over the following years. The money bought time without fixing whatever was driving people toward bankruptcy.
Two limits are worth keeping in mind. The study covers prizes up to $150,000, so it says little directly about multimillion-dollar jackpot winners, whose stories are known mostly from news reports rather than data. And it measures bankruptcy, not every kind of financial trouble.
Why do some winners run out of money?
The research doesn't track individual spending, but the arithmetic is simple. A jackpot paid as a lump sum is much smaller than the advertised annuity amount, and federal withholding of 24% at claim time usually falls short of the final bill, since a large prize puts most of it in the 37% bracket. Spending $200,000 a year from $5 million after tax, with no investment returns, uses it up in 25 years; at $400,000 a year it lasts about 12. Gifts, loans to family and friends, and investments in other people's businesses shorten that. The lump sum vs annuity guide and tax on big jackpot wins go through the numbers.
Publicity adds pressure. In states that publish winners' names, requests for money can start soon after the announcement. Whether you can claim privately depends on the state that sold the ticket; see our anonymity guide.
Do lottery winners get divorced more often?
Not according to the best evidence available. In "Lucky in Life, Unlucky in Love?" (Journal of Human Resources, 2011), Hankins and Hoekstra compared Florida winners of $25,000 to $50,000 with small-prize winners. They found the larger prizes did "not cause statistically significant or economically meaningful changes in divorce rates." They did find that single women who won became less likely to marry. As with the bankruptcy study, the prizes are modest, so the results don't settle what happens after a jackpot.
Are lottery winners happier?
On one measure, yes. Erik Lindqvist, Robert Östling and David Cesarini surveyed a large sample of Swedish lottery players and analyzed the results using procedures they registered in advance. Their paper, "Long-run Effects of Lottery Wealth on Psychological Well-being" (Review of Economic Studies, 2020), found that large-prize winners reported higher overall life satisfaction than matched controls, and that the increase lasted more than a decade without fading. The effects on day-to-day happiness and mental health were much smaller. The authors point to satisfaction with personal finances as the main reason.
What helps after a big win?
No study follows jackpot winners who did well, so there's no evidence-based checklist. What the research does show is that money alone doesn't change the situation that led to financial trouble, which argues for planning before claiming rather than after. Practical steps that follow from that:
- Keep the ticket safe and the news private until you've decided how to claim.
- Check the claim deadline. For Powerball and Mega Millions it ranges from 90 days to one year depending on the state, which usually leaves time to get advice.
- Get a tax professional, a lawyer and, if you want ongoing investment help, an adviser paid a flat or hourly fee rather than by commission.
- Choose between the lump sum and the annuity with that advice. The annuity pays in yearly instalments, which limits how much can be spent early.
- Decide in advance how you'll handle gifts and loans to family and friends.
The claim process itself is covered in how to claim a lottery prize, and gifting rules in can you give lottery winnings to family.
Lottery winner outcomes FAQ
Do 70% of lottery winners go bankrupt?
There's no evidence for that figure. It's usually attributed to the National Endowment for Financial Education, which says the statistic isn't backed by its research and can't be confirmed.
Are lottery winners more likely to go bankrupt?
A 2011 study of Florida Lottery winners found that prizes of $50,000 to $150,000 delayed bankruptcy but didn't prevent it: the bigger winners filed less often at first, but the difference disappeared over the following years.
Do lottery winners get divorced more often?
A Florida study of prizes between $25,000 and $50,000 found no statistically significant or economically meaningful change in divorce rates. It did find that single women who won became less likely to marry.
Are lottery winners happier in the long run?
A pre-registered Swedish study found that large-prize winners were more satisfied with their lives for over a decade, mainly because they felt better about their finances. Effects on day-to-day happiness and mental health were much smaller.
What should you do first after winning a big lottery prize?
Keep the ticket safe and say nothing publicly. Check your state's claim deadline and anonymity rules, then get tax and legal advice and decide between lump sum and annuity before you claim.
Sources: NEFE statement (2018); Hankins, Hoekstra and Skiba, Review of Economics and Statistics 93(3), 2011; Hankins and Hoekstra, Journal of Human Resources 46(2), 2011; Lindqvist, Östling and Cesarini, Review of Economic Studies 87(6), 2020.
