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Is Winning the Lottery a Reasonable Retirement Plan?

Millennials aren’t ruling it out — by a long shot.

Many Americans fail to benefit from the booming stock market because they think they lack the money and — more importantly — the know-how to invest, according to recent research from New York-based STASH, a consumer investing app. Moreover, a disturbing number of U.S. consumers are willing to gamble their retirement on a lottery win in the place of a sound investment strategy.

Faith in Investing Is Low; Faith in Lottery Is High

While almost a third (31 percent) of Americans don’t invest because they think it’s “risky,” 39 percent (including 59 percent of millennials) feel it’s reasonable to think of the lottery jackpot as a potential means of retirement. Indeed, it’s the only plan that many Americans currently have:

  • 18 percent are basing their retirement plans on hopes they will win the lottery, including 26 percent of millennials, 19 percent of Gen Xers and 13 percent of baby boomers.
  • Millennial men in particular (66 percent) feel the lottery is a reasonable retirement plan, compared to millennial women (58 percent).
  • However, if they did win the lottery, more millennial men (61 percent) than women (42 percent) would save or invest the entire amount.

For those not banking on a lottery win, more than a fifth (22 percent) of Americans plan to spend their retirement working a part-time job. A minority will expatriate to find cheaper living abroad (4 percent), depend on their children (4 percent) or try to find a rich spouse to support them (3 percent).

Millennials in Particular Are Struggling to Save

The new “largest generation” is struggling to attain financial stability, to save and to prepare for retirement:

  • 76 percent of millennials are living paycheck to paycheck.
  • Of these, millennial women (29 percent) are more than twice as likely as men (12 percent) to also have debt and be unable to save.
  • Millennial women (31 percent) are almost three times as likely as men (13 percent) to have no retirement plan of any kind.

When it comes to investing, millennial men are also doing marginally better than women — 62 percent manage to invest 5-15 percent of their income while 52 percent of millennial women invest less than 5 percent of theirs. Although, in the minority of top savrs — those investing more than 15 percent of their income — millennial women (14 percent) significantly outnumber men (4 percent).

Lack of Know-How Keeps Americans from Investing

Many Americans are living paycheck to paycheck or simply don’t have money to invest, but the data suggests this is far from the whole story:

  • Nearly half (48 percent) would start building retirement nest esggs if only they had more knowledge about how and where to invest.
  • 35 percent said access to free, high-quality advice would be an incentive for them to invest.
  • 29 percent avoid investing because they feel they lack expertise and find the whole process overhwhelming.

“Playing the lottery may be fun, but it’s the opposite of a safe bet,” said STASH CEO Brandon Krieg. “Instead of crossing their fingers and hoping their lottery jackpot dreams come true, people can take concrete steps to improve their finances.”

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