I’m speaking of the average person, and strictly from a statistical standpoint. Also, I’m referring to wealth before retirement age. Most of the people I know are pulling in about 50K to 70K per year and barely pay their bills (what they do save is mostly for their kids college). Furthermore, most of these people wouldn’t dare consider doing something like starting their own business (too risky). Thus, what other avenue offers them a possibility of attaining tremendous wealth? I realize that this goes against the conventional wisdom, but has anyone ever done a statistical analysis of this situation (with the hypothesis being the chance of becoming a millionaire at a relatively young age at least before retirement, with playing the lottery verses other approaches).
You are going to have to define “wealthy”. It is not that difficult for the average upper middle class family to build assets and cash in the low millions just by making it a priority, living the disciplined lifestyle that it takes. To accumulate 100 million dollars would be tough (but not impossible).
I happen to have some real world examples from my family:
My FIL started with nothing and opened a butcher shop at the age of 18. He build up a gourmet foods importing business and several other buisnesses that make him worth somewhere between 10 and 20 million dollars today. He is 70 years old and that took him over 50 years.
His lazy younger brother sat around and played the lottery to the tune of $50 a week. One week, he won 4 million dollars. That paid out for 20 years and just ran out and he is broke.
My FIL’s best friend started out as a stock boy and worked his way up to CEO status. He was president of Staples during its assent, cashed out, bought a Boston supermarket chain, cashed out, bought an investment company and is worth over 100 million dollars today. That only took 17 years from middle class to ultra-wealthy.
In summary, most educated people can accumulate money if that is their priority. That is a good bet. The odds on winning the lottery are so low that it is a suckers game and even if you do win, it may not turn out that well.
Sorry for sounding so blunt here, but someone once said that a lottery is “a tax for stupid people”.
Lotteries do pay out jackpots in the millions of dollars but Is it really that necessary for someone to have that much money? Sure it would be nice to have those millions but the odds of achieving it by a lottery are rather remote.
I’ve written a “virtual lottery” program on my website:
www.1728.com/lottery.htm
Give it a try. It is just as “honest” as a regular lottery is. (Seriously, it’s based on the typical lottery - the state gets about 50% the people get the other 50%. Pretty lousy odds right from the start).
If you know people earning 50 to 70 thousanf per year and can’t pay their bills, their main problem seems to be managing their money.
How many people get wealthy from the lottery? There is a 1 in 16 million chance on the standard 50-number game, and it’s played pretty often, so what, the average lottery player has a one in 100,000 chance of becoming moderately wealthy (maybe two to five mil)?
On the other hand, people who work hard and take risks become that wealthy at the rate of one out of 100, 200, 300 maybe? There’s no comparison - hard work is much more likely to make one wealthy.
On the other hand, the OP stated that he’s talking about people who make 60 to 70 thousand a year working a corporate job, and spend almost all of that. If any of these people get wealthy by continuing to do that, the lottery’s the only way.
I found a site that answers your question. It looks a little tacky but I cross-checked some of the numbers and they were correct:
"The IRS identified about 3.5 million American millionaire households in 1996. 4.8 million Americans could access a million dollars as of 1997. At that point, with approximately 126 million people in the work force in America, this means that roughly 1 in every 36 working Americans, roughly 3% of the workforce had become a millionaire. One in thirty-six!
If you think it’s all about winning the lottery or a lawsuit or athletics or tv, movie, & records stars, think again. Add up all of these millionaires and we count less than one percent of all US millionaires!!! As for the lottery, you have a better chance of being struck by lightning…28 times in one year…… than you do of hitting the lottery.
Of 126 million working Americans, 328,571 new millionaires per year translates out to 1 in 383 people, each year!
Do you realize what the chances are of winning most state run lotteries? Something around 1 in 7.5 million! With odds of 1 in 383 versus 1 in MILLIIONs, they are much greater that you will become a millionaire on your own than through the lottery."
http://www.newyorkbodyscan.com/millionaires4.html
Here are the numbers for new millionaires for 2004:
http://www.smh.com.au/articles/2004/06/16/1087244946588.html?from=storylhs
Being absurdly generous, you can safely say that less than 10,000 of those were created by lotteries.
If somebody can’t make it on 50-70K, then there is something seriously wrong with their lifestyle - or they’re just living in the wrong area of the country. (Which is probably the only area they can make that much) - Okay, rambling. I guess my point is, to me, bringing in $1,000 - $1,300 every week is wealthy! … 
really?
In the (UK) lottery, somebody wins every week, on average.( Sometimes there are no winners, sometimes there are several. On average, about 1 new millionaire per week)
How many people have ever been hit by lightning 28 times in one year? In all of history, and the whole world?
I’d say winning the lottery is much more likely.
Believe, my personal standard of the poverty level here in the Boston area for a family of 3 is anything less than 100K it takes 50K over that IMHO to push into the comfortable middle class range. It really does depend on your area of the country and whether you are single or not.
Please not that wasn’t me. It was the an excerpt from the site I posted. I
:dubious: at that two. However, the actual numbers that they used matched up with other sources that I looked at. That site just had everything summarized for the question.
Please note that wasn’t me. It was the an excerpt from the site I posted. I
:dubious: at that two. However, the actual numbers that they used matched up with other sources that I looked at. That site just had everything summarized for the question.
Ditto that for the SF Bay Area.
And ‘best chance’?
I’d have to say no. I think hard work pays off much more often than winning the lottery.
That is not the correct question to ask. What you should really be comparing is the probability of winning the lottery with the probability of getting hit by lightning? However, while the probability of winning the lottery can be computed with some counting, it is quite difficult to figure out the probability of getting hit by lightning. I’m not even how a statistical study to estimate that should be set up. Here are some numbers I’ve found anyway.
A few points to consider with regard to the people I am talking about (which probably make up at least a third of working Americans).
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The risk of starting a business is not an option for most.
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The fifty to seventy thousand is for a two income family. In many cases it is less. I’m talking about the policemen, teachers, and yes Wall Mart workers (non management) of the world.
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Education is usually maxed out with either a highschool diploma or a basic undergrad degree and no trade skills to speak of (I’m thinking of my cousin Mark for example who works for a lock company earning $12.00 per hour seventy hours per week, has four kids his wife works at Wall Mart about forty hours per week earning $9.00 per hour and they will probably never earn more).
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I define wealthy as enough money to be able to travel, do what you basically want and NOT have to work. I would say that about 1.5 million or more after taxes should do the trick with a frugal lifestyle in this part of the country.
Also, let’s say that they invested ten dollars per week in the lottery with five going to the State, and five going to the Powerball lotteries (with average jackpots around 2million, and ten million respectively). I would argue that they have essentially “zero” chance of obtaining wealth (which would allow them to meet the above criteria) outside the lottery. Advancement at their jobs is not realistic without degrees which they are neither in a position nor do they probably have the ability to obtain. Furthermore, even the managment job at the lock company only pays about $15.00 per hour (I don’t know what non degreed management maxes out at, at Wall Mart, but I don’t think that it is over the mid 20’s).
Not to hijack, but I have to say - below 100K is poverty? That’s ridiculous. Only about 17% of households in MA make more than 100K. Less than 7% make more than 150K.
I live in the Boston Area so I know all about the cost of living here, and I’m sympathetic. But you are horribly out of touch with how most people here are living.
The possibility of amassing a great fortune thru hard work and frugality AND without luck, is very small. That’s why we call it “fortune”.
So the odds of that may be of the same general order as winning the lottery.
But what about all these millionaires? Well, one would have to look at the individual circumstances – my WAG is a very large percent started life as hundred thousandaires.
One generally can’t save and invest their way to large sums unless they have the income to save or the capital to invest. If you come from a background that can’t pay for your education, you either don’t get educated which greater decreases your chances or you must pay for it yourself. Starting your working life in a hole will usually mean it will take a good slice of the working years to simply get up to zero.
Sure it is. It’s a reality check – the site claims that it’s more probable that a person will be struck by lightning 28 times in one year than that the same person will win the lottery. If that’s true, then you would expect there to be more people walking around in the US who had been lightning-struck 28 times than there are lottery winners.
Peter Morris is quite correctly pointing out that that’s ridiculous. There are hundreds, if not thousands, of multi-million dollar lottery winners in the US. The person who holds the record for being struck by lightning was struck seven times over a 41-year period. Not even close to 28 times in a year. So something seems awry with the statistics, because the reality doesn’t match the expectation.
So now we can start asking other questions – like “what is the probability of winning the lottery” or “what the probability of getting hit by lightning?” but that doesn’t mean that asking the reality-check question was improper.
My guess is that someone calculated the odds of being struck by lightning and the odds of winning the lottery and found that the odds of being struck by lightning are 28 times higher that winning the lottery. And that same person is statistically illiterate, and added the probabilities rather than multiplying.
My wife and I know a couple that won $34 million in the Lotto about 6 years ago. Seeing them now is all the motivation I need to plunk down my $10 a week for a chance at a life like that.
As another Boston area resident I have to agree with uglybeech. 100K for a family of three in my area (25 miles NW of Boston) is NOT poverty, it’s comfortably middle class. Such families may not own a big house or vacation overseas every year but they should be paying necessary bills easily (assuming they have health insurance) which I venture to say most people in this income range do.
I know the OP is looking for statistics, not opinions, but honestly: more than a few of the people who strike it rich in the lottery, unprepared for wealth, end up miserable. Anybody, working at Wal-Mart or not, can sock away 10% of their income into an IRA (or even better, a fund their employer matches), be smart with their savings, avoid debt, and be what anybody would consider wealthy at retirement. For some people, that means retiring early - in their 50’s, say, which isn’t what the OP is looking for but is a lot more reliable, easier, and less likely to make you dreadfully unhappy and broke than the lottery. Put that ten bucks a week into your 401k, man.