Would You Quit Your Job as a Lottery Winner? How Financial Independence is Like Winning the Lottery

lottery winner

She watches with anticipation, hoping to become a lottery winner as the numbers pop up on the screen.

3. Her daughter’s age

12, 16. She was born on December 16th!

26. Her age when she graduated medical school and got married.

33. Her current age and the fifth of her lucky numbers. This is really happening. Just one number to go…

11! This one goes to eleven!

She figured if she didn’t win the lottery, she could live on half her takehome pay and be financially independent in about 11 more years.

But that won’t be necessary. She won the lottery! She really won!* A lottery winner at age 33.

Can you imagine? Millions of dollars at her disposal only a few years into her medial career. The question is, what does she do next?

While almost no one reading this blog will have to answer this question as an actual lottery winner, most of you will be facing a similar question one day after becoming financially independent.

*She didn’t really win; this is a fictional story, and she doesn’t exist. Non-existent people cannot win non-existent lottery drawings… or can they?


Would You Quit Your Job as a Lottery Winner? How Financial Independence is Like Winning the Lottery


Before comparing and contrasting, we ought to establish what sort of lottery winner we’re talking about and what it means to have financial independence.

Starting with the latter, people are considered to have reached financial independence when they can maintain their current standard of living indefinitely without having to earn additional income. Their accumulated assets will support them.

This can mean having at least 25x one’s annual expenses invested (abiding by the 4% rule) or having sufficient truly passive income that meets or exceeds one’s anticipated cash flow needs.

Regarding the lottery winners, we’re talking about life-changing money. Millions. Not the five-figure or low six-figure winnings that have a fascinating tendency to bankrupt your neighbors, but a true multi-million dollar prize.

There’s obviously a difference between a $1 Billion windfall and a $10 Million payday, but either will make almost any of us truly financially independent overnight.


lottery winner
either a lottery winner or a business owner, as seen from Camelback mountain


The Value of a $10 Million Lottery Winning Ticket


Let’s say those numbers in the introduction (which are the actual winning numbers from a rigged Iowa lottery) gave our lucky lottery winner a $10 million prize.

Would she start planning a life based on a $10 Million nest egg? Of course not.

First, she would only get $10 million in earnings if she took the prize as an annuity over 20 to 30 years. That would give her $333,333 to $500,000 a year in income for the next two or three decades. She would have to pay taxes on those payments, so she might only have about $250,000 to $350,000 per year after the IRS and state get their cut.

Once the 20 or 30 years of payments is up, she might have another 30 or more years to live, so it would be prudent to set aside a portion of those earnings to cover her remaining lifespan. Clearly, she’s not going to be able to apply the 4% rule to that $10 Million number and live on $250,000 a year indefinitely.



Physicians and pharmacists, Register with Incrowd for the opportunity to earn easy money with quick "microsurveys" tailored to your specialty.


What if she, like many lottery winners, opts to take the lump sum instead?


Lottery winners are typically given a choice to take the annuity years or take a lump sum at a reduced rate. I’ve calculated the difference between the reported prize and the lump sum offered on a number of recent lottery prizes, and it tends to be 40% to 50% reduction right off the bat.

For example, the recent winner of the $1.537 Billion Mega Millions jackpot received a lump sum of $877.8 Million. After taxes in South Carolina, the winner is left with about $492 Million, or less than a third of the stated prize.

If our hypothetical $10 Million winner takes the lump sum using the same formula, the bounty is now worth $5.77 Million. The tax treatment on the lump sum is not kind. The vast majority of the earnings will be in the 37% federal income tax bracket and with state or local taxes factored in, half of that money could go to pay income taxes.

After all is said and done, the after-tax lump sum $10 Million lottery winner will have something in the range of  $2.8 and $3.6 Million left depending on where she lives.

That’s fatFIRE money and happens to be in the nest egg range where I felt comfortable retiring.

That’s right. It’s almost as if I won a $10 Million lottery prize. I just had to work a little harder for it.


How Financial Independence is Like Winning the Lottery


Multimillion dollar lottery winners and the financially independent will be faced with similar choices. Will you keep working? Are you ready to call it quits?

A life-changing amount of money is a life-changing amount of money no matter how you acquire it. You could also include the recipients of a large inheritance in this category, although they’ll have a different set of issues to contend with like grief and RMDs. Still, money is money.

Realizing that you are truly living a work-optional life, you will question how you are spending your days.

Is there something you’d rather do with your time? Is your career a calling or just a good way to pay the bills and save for what’s next?

What is next? Will you feel guilty if you do leave your job? How will you fill your days? Do you have kids to raise that could benefit from more time?

Would you work part-time? Can you work part-time? Have you considered locum tenens or temporary work?

If you choose to work less or not at all, how will your coworkers feel about that decision? How about your immediate family or extended family? What’s the transition plan?

Bombarding you with all these questions is starting to stress me out, and I’m the one on the delivering end and have already answered most of them for myself already.

The fact is, whether you won the lottery, lost a wealthy relative, or earned enough money to become truly financially independent, you’re going to have some soul searching to do and some big decisions to make.

How you answer those questions and what you do with that money will have a huge impact on not only what your life looks like going forward, but also on the lives of your loved ones, colleagues, and on how others perceive you.


The Difference Between Lottery Winners and the Financially Independent


If you want to be particular, you could argue that lottery winners are also among the financially independent; they’re just a subset of the FI. Technically, you would be correct, but you don’t want to be that particular.

For the purposes of this discussion, I’ll be comparing the lottery winner who became FI overnight to someone who earned, saved, and invested until the magic number was reached.



One obvious difference is the suddenness in which the lottery winner became wealthy.

This person may not be accustomed to having much left over after paying the bills. She might not have much experience with investments. She might not have any idea what to do with a seven-figure balance.

She also hasn’t had any time to ponder what life could look like if she didn’t have to work anymore. All of those questions above thrown at her all at once could be overwhelming.

The person who arrived at FI over a number of years has seen it coming. She remembers when her net worth first hit zero, then six figures, and when she finally could call herself a millionaire. She celebrated each and every one of those milestones.


Friends & Family

Guess whose Facebook profile gets flooded with friend requests? The lottery winner, of course. Who’s more likely to be asked for a “loan,” an investment in some hair-brained business idea or straight-up asked for the gift of money?

Once again, it’s the lottery winner.

When you reach financial independence one paycheck at a time, practicing stealth wealth while working your way to eventual financial independence, you won’t be dealing with the same level of wealth envy.

As a steady wage earner, you may not be immune to some of those requests — your friends and family do realize you have a good job — but they probably won’t know you’ve accumulated the equivalent of a $10 Million lottery prize. That is, unless you state it publicly on a website that receives millions of views each year.

No. You cannot have my money.


Marketable skills

One of these people has proven that they have the ability to earn a good living, resist the temptation to spend up to or above their means, and to invest in a sensible manner.

One of these people has not.

The person who earned financial independence the hard way is in a great spot to better her position by working just one more year or several more. She also has the ability to alter her course and return to gainful employment if she takes a break and finds out that a life without a career doesn’t suit her.

Remaining in her career may be more meaningful as compared to the lottery winner. After all, the job is what put her in this enviable position. The impact of continuing to generate income will probably affect her finances more than working one more year at the cheese factory like the 100 Sargento workers who split a $208 Million prize in 2006.


Experience With Money

If you ask any geek off the street what they would do if they had a million dollars, they probably wouldn’t tell you they’d invest it to be one step closer to financial independence. No, they’d tell you how they would spend that million dollars, or at least a good chunk of it.

A big lottery winner can be pretty much anyone off the street, or anyone off the street with a spare dollar or two and an interest in playing the lottery.

And what do too many of them do? Blow it all. Don’t act surprised.

In contrast, the get rich slowly types will know what it’s like to have $10,000, $100,000, and eventually $1,000,0000 or more at their disposal.

They have taken the time to learn some investing basics. They’ve seen what the Joneses are doing and have chosen a different path. There’s a plan for the dollars they’ve saved up over the years and they’re not likely going to squander them.


Asset Location

It’s not looking so good for the lottery winner, but she will have one advantage over the lifetime achiever. Pretty much all of her money will be post-tax.

Now, she won’t have much in the way of tax-protected space in which to invest the money, but a taxable brokerage account is a perfectly fine place to invest. Other than some potential tax drag that should be minimal if she no longer has earned income, and the possibility of future capital gains taxes (which can be avoided in several ways), this money shouldn’t see much in the way of future taxes.

The wage earner will have more money growing in a tax-advantaged way, but all of her tax-deferred dollars and their earnings will eventually be subject to ordinary income tax.


If I Won the Lottery


Would I quit my job if I won the lottery?

Way back in late 2015, I discovered Mr. Money Mustache and the concept of financial independence. I realized we were in pretty good shape right then and there.

The nest egg looked a lot like it would after a $5 Million prize was pared down by the lump sum discount and taxes were paid.

I did not quit my job.

I did, however, begin to contemplate what I wanted the rest of my career and post-career to look like. I thought about the things I might do if I were to retire.

I decided to work for a while longer, but I bowed out less than five years after that initial revelation. It’s a decision that I came to after much reflection and discussion with my wife, my kids, and even my parents.

In the interim four and a half years from discovering this thing called financial independence, our nest egg has doubled from a combination of both work and investment returns. I felt more than ready for what would come next (semi-retirement) both financially and emotionally.

I did not want to leave my colleagues in the lurch, and I played a prominent role in identifying my eventual replacement who happened to reach out to me to inquire about the possibility of a job opening in our small group.

He was hired a year and a half before he’d be eligible to start and I agreed to stay on until he was finished with residency, living here, and oriented to the job. I expressed a desire to be involved in that aspect, too, and I was able to pass on a few last bits of wisdom before moving along.

To answer the question posed, yes, I would quit my job if I won a $10 Million lottery prize, but I would take my time and do it right.


A generous and temporarily increased welcome bonus of 80,000 points & Peloton membership credits on the Chase Sapphire Preferred & premium card perks with the Chase Sapphire Reserve!

Annual fee
Intro APR
Regular APR
Recommended credit
Bonus Intro Rewards
bonus_miles_full read more
Annual fee
Intro APR
Regular APR
Recommended credit
Bonus Intro Rewards
bonus_miles_full read more


What would you do if you won the lottery? Buy something you’ve always wanted? Change careers? Work less? Would you quit your job?

Share this post:

12 thoughts on “Would You Quit Your Job as a Lottery Winner? How Financial Independence is Like Winning the Lottery”

  1. I think there is a huge difference between earned income and unearned income.

    I am so blessed to be able to serve others, be a good steward of resources, and grow wealth.

    I think lucky gamblers, thieves, trust-fund kids, and lottery winners struggle with all the unearned income. Money is a great reward for service to others but without service, the money can become a burden.

    I never buy lottery tickets because it is a poor bet and a waste of money. Also, I never want to be a lottery winner.

    Similar to TPP above, I wouldn’t change much until age 50. Oh wait. I passed that.

    Apparently I wouldn’t change anything. Since I’m past FI, if I wanted to do something different wouldn’t I have made that change already?

  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Thanks for the insightful article.

    Yes, I would quit my job and I’m so grateful for having started the journey of financial independence because it has given me the tools to be able to handle having that kind of money all at once. The kind of people playing the lottery don’t strike me as the sort to be serious about managing their money.

    Personally, I would invest most of it and keep living more or less the same way as I currently do.

  4. Well, I wouldn’t call it “winning” by any stretch but….we received a low-seven-figure legal settlement a few years ago following a medical malpractice case.

    I realize that I’m sticking my head into the lion’s mouth, so to speak, by posting this in a forum frequented by physicians. I will tell you that I am pretty conservative on the political spectrum, and I’m absolutely not a fan of frivolous lawsuits for the results of risks that are just part of everyday life. However, I think (hope?) that reasonable people will acknowledge that there are certain cases of extremely careless behavior for which legal action is warranted. This was one of those cases, I believe. In my case I actually hesitated to even start down that road, but I eventually decided to do so after going through the aftermath of my original surgeon’s carelessness. For what it’s worth, my second surgeon – the one who had to clean up the errors or the first surgeon – and his nurses actually encouraged me to follow up legally.

    As you indicated, I think the biggest difference between my wealth and that of typical FIRE followers is how quickly the money was accumulated. Typical FIRE people have many years to learn the basics of saving and investing, and to come up with plans following retirement. In my case, the money came as a complete surprise. I actually expected a relatively low payout – if anything – since most of my expenses were covered by health and disability insurance which all have to be reimbursed as part of settlement. While there was a lot of “pain and suffering” associated with my injury, I didn’t think there would be that much value on this. Apparently that was a mistake.

    Thankfully, we recognized early on that we had a lot of catching up to do. I didn’t know much about saving and investing prior to receiving the settlement, but prior to that point I actually did many of the right things by accident. One of the engineers I once worked with had been a stockbroker, and early in my career he recommended to me & others to invest in low-cost stock index funds. So, at the time my entire retirement portfolio was 100% equity index funds, and had been for at least 20 years. (I also didn’t sell during the 2008 collapse, mainly because I was too stupid to know how incredibly risky my portfolio was at that time.) We also had regularly saved 15% of my salary since graduating, since that same broker recommended that to me. Our spending had also always been low, again not intentionally – my family just has simple tastes and don’t need to spend a lot of money to achieve the lifestyle we wanted.

    That said, I realized that I had a lot to learn before trusting myself with a seven figure windfall. So we read books on investing, including The Bogleheads’ Guide to Investing. We also stumbled onto Mr Money Mustache’s blog during that research, which was sort of a “red pill” moment for my wife and I. We then started searching for other blogs about early retirement, and found your blog (one of the good ones, in my opinion!) and others.

    So….yes, we did the “boring” thing with our windfall and simply invested it in a tax-efficient diversified portfolio of index funds. If anything, our spending actually went down once we realized that financial independence could be an achievable goal for us. We also didn’t share the info with anyone, which has helped prevent external pressure to spend. In fact, I don’t think we spent the money on anything after the windfall – we were almost so stunned by the amount that we didn’t know what to do with it, including spending it.

    We also elected to stay at our jobs, at least for the time being. We’re looking to eventually early retire, probably near term, but how to manage the questions we’ll get from family and friends is something we’re concerned about. We also have to decide what our lives will look like after early retirement, since (as I mentioned) it’s just not something we’ve thought much about prior to the windfall. Even though it’s been a few years since the settlement, we’re almost still in denial about it…

  5. Of course I would quit! This is my job, not my hobby.

    I’m not going to worry about what my colleagues would think. Why should I?

    • Should you care what they think about you? I guess that depends on your relationship with them. Most of us, including me, tend to care too much about other people’s perceptions of us.

      I do think it’s important to be considerate and make an exit strategy that doesn’t negatively impact your colleagues if possible, though. I’ve been on the receiving end of some short-notice employment issues and it’s not always fun or easy. I wasn’t going to do that to my coworkers.


  6. That’s a great premise. I would cut way back on work (blogging/SAHD) if I won the lottery. 😀
    Other than that, probably no big changes. Maybe remodel our home a bit.
    My life is already very good so I don’t want to change too much.

  7. My father-in-law’s retirement hobby is to track lottery prizes and calculate payouts. So, virtually every time we do a lunch or dinner with them, I end up talking through this exercise. It’s entertaining! (Though I do worry about him a little…)

    Before it used to be a bit more of a dream exercise, but as we’ve progressed through FI planning it’s now useful. I’ve also realized that if I were to receive a windfall, I’d do a three-year phase out from work to provide for a good transition for everyone. I know I’d also enjoy work more at that point.

  8. Hard to say which is better lump sum vs annuity. Losing half is a big cut and I feel that it is more of a loss then the time value of money. Especially when you figure in the taxes would be worse as a lump sum. Once you get to the point that the annuity is being taxed at the highest marginal rate it would be a closer call but for the example you pose above I would go with the annuity.

    I would not have too but I likely would keep working. I enjoy my job but not every aspect of my job. I would try to get rid of the parts I did not enjoy which should not be hard because I would not mind a decrease in salary in this scenario. And if I could not mold my job to something I wanted I would have the FU money to walk away and find a better one.
    I am sure it would effect my lifestyle but I do not think it would be extreme. I would not move. I think getting a big house is what trips up most lottery winners. I would be more free with my time and take more vacations. But it would be hard to bankrupt yourself even if your vacation spending went up 10K a year, Even 20K.

    I for sure would not buy a boat.
    I do not think I would even buy a new car if I won the money today.
    Call me boring I guess.

  9. I have often thought what the lottery amount would be to match my yearly income and it would be quite a staggering prize if it was paid out like 20 year installments. The obvious difference is the time component (and since time is the most precious resource we have the lottery winner could have that in spades compared to me).

    You are right that most lottery winners (and even professional athletes) are ill-prepared to handle such large sums thrust at once. They go on spending sprees and that is why so many are bankrupt or even worse than the started off with. The phrase a fool and his money are soon parted rings true.

    Some advice, that is not often heeded, with lottery winners is to not touch the money for one year. That cooling off period can allow you to research and assemble an appropriate team to help with your finances.

    If I won the lottery that would allow me to comfortably withdraw an annual amount I am currently shooting for (125k/yr) I would definitely leave medicine in a heartbeat. Too much risk in the medical practice to put myself through it when I have “already won the game.” Every time you wear that white coat you stick your neck out. Don’t need to be on the chopping block if money is not an issue anymore.

    • That was my thought. In the litigious world of medicine, Im not sure continuing to practice after a profound windfall would be wise

  10. Interesting question, POF.

    I think I’ll always work in some capacity as a physician. At least until I am 50. Ideally, I’d work 2-3 days per week doing anesthesia and 2-3 days per week on my side hustles (blog, book, courses, etc).

    Retiring “From” something is a dangerous mindset. All of us need to “retire to” something we are passionate about. I think humans need to be productive, and so I couldn’t hang it up immediately if I won the money. And I like teaching people too much not to continue to do that on my site and in clinical practice.

    The interesting thing about winning the lottery is that it would make that kind of schedule an immediate possibility – which would be great.

    I’d certainly invest 90% of the money I took home and spend the other 10%(per The 10% Rule). Then, I’d continue to work.

    The goal shouldn’t be to walk away from it all, but to live a life that we find meaningful and worth while. Big opportunities (like winning the lottery, your business taking off, or an invention being purchased) can be pivotal in making that happen sooner…. but it can also lead to the realization that you miss the productivity and purpose you had in life before you won that money.


Leave a Comment


Related Articles

Subscribe to Physician on FIRE

If you do not see a subscription box above, please navigate here to subscribe.

Join Thousands of Doctors on the Path to FIRE

Get exclusive tips on how to reclaim control of your time and finances.