Saving for Retirement: The Lottery vs. the Stock Market

January 19, 2006

A new Tax Foundation “Fiscal Fact” compares the expected rate of return from the stock market to the expected rate of return from playing the lottery and declares the stock market the clear winner.

A recent survey reported that 21 percent of respondents believe the lottery is a practical way to save for retirement, but Tax Foundation data show that they would fare better by investing in stocks than in lottery tickets. A person who spends $100 per month on the lottery—slightly less than the average Rhode Island resident’s lottery expenditures—could earn an additional $144,403 over 40 years by investing in stocks instead.

Take a look at the data comparing rates of return for the two retirement strategies at various spending or investment levels, as well as per capita lottery expenditures for every state.

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