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A New Way to Think About What “Millionaire” Means

July 8th, 2012 · No Comments · Public Choice Theory

If you cash in your million dollar winning lottery ticket in Virginia like this man did, you can take it in installments of $40K a year for 25 years.

If you are a retired teacher in Illinois, your pension is (on average) $45K per year. Plus it will go up annually thanks to automatic cost of living increases.

Note that data from the U.S. Department of Education shows a median retirement age for public school teachers of 58 years. Given a life expectancy of 81, that’s 23 years of expected payouts (not including death benefits to spouses etc.) I am also not including pensioners health benefits nor the fact that these teachers contribute to their pension fund at a rate of 9.4 percent per year.

I’d love to see a real cash flow analysis of everything involved. Given this quick pass, I think it’s safe to say that there are definitely some (many?) public employees who are effectively lottery winners.


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