Crap Shots To IRAs
Imagine giving 20 million Americans a retirement nest egg of $200K. Now imagine if those 20M people were some of the folks (chronic lottery players) most in need of retirement planning. Then imagine if it could all be facilitated by the very practice that takes advantage of people least able to afford it.
Imagine enabling lottery players to pay for their own retirement by playing the lottery.
I came across Alex Tabarrokis post Get Lucky or Get Rich Trying the other day and, while not specifically local in its scope, itis a compelling idea that could have significant local impact.
Tabarrok writes about a way to convert lottery revenues into private retirement accounts. He contends the impact on education would be negligible as ilottery for educationi is a charade since the money is fungible.
Tabarrok goes on to cite Ian Ayres and Barry Nalebuff as to how it could work:
A lottery savings ticket would look just like a lotto ticket, scratch like a lotto ticket, cost a buck and pay out the same prizes. The only difference would be that half the revenue would be earmarked for a personal retirement savings account rather than for education. There would still be about a third for prizes and the remainder for administering the game.
Setting up a personal retirement account would be no more difficult than setting up a mutual fund. Players would receive a swipeable card that would automatically credit a portion of each losing ticket to the player's retirement account...
Some 20 million Americans spend at least $1,000 a year on lottery tickets. For these heavy purchasers the new tickets would increase their personal savings by $500 a year. Invested over 40 years, these savings tickets would generate an expected retirement nest egg of $200,000. This is a lot of money for the mostly not very prosperous crowd who buy lottery tickets every week.
Enabling 20 million people to accrue a $200K retirement fund just by continuing to play the lotteryowhat an inspired way to ichannel failures of reason and prudence in ways that redound to the individual's self-interest.i
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comptart
this is frightening.
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Sam
But what about people who don't play the lottery but still don't save for retirement?
How about appying similar swipeable card to other often-frowned-upon behaviors....
... maybe Beer to IRA?
Or, letsee... cigarettes... porn... fast food... sugared sodas ... lap dances... ok I better stop! ;)
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