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I had a terrible epiphany the other night--if I won $4 million in the lottery tomorrow, I'd have to keep working. After taxes, that $4 million would become $2 million...

Well, I think you're overestimating taxes a bit. The highest Federal tax rate is 35%. State income taxes would probably be from 0% to 10%, depending on where you live - so you could end up with anywhere from $2.2 million (at 10% state income tax) to $2.6 million (at 0% state income tax).

and if I were to put all of it in an interest bearing account at today's measly rates (let's just say 2% for the sake of round numbers), that would get me $40,000 per year--not enough to support my partner and me now, let alone in 25 years post-inflation.

Well, if inflation kicks in, it is likely that those measly rates will go up. However, if you are only putting your money into 'safe' bank accounts (where you get those measly rates), you will generally lose to inflation, as bank rates don't usually pay enough to offset inflation. That's the 'risk' with 'safe' investments.

Investing your money in stocks and bonds, even though it's 'riskier' than guaranteed bank accounts, should provide you with higher rates of return. A 60/40 stock/bond mix will generally provide enough returns that you can take out 4% a year (considered to be a 'safe withdrawal rate'), and adjust for inflation, without running out of money, for at least 30 years. Starting with a 3% withdrawal should make the money last even longer. There are a lot of assumptions behind this process, so googling 'safe withdrawal rate' to get the details is recommended.

If you're really concerned about investing for yourself and you have a lump sum, like from a lottery win, you can buy a single premium fixed annuity with an inflation adjustment. Of course, there, you run the risk that the insurance company you invest with will still be there as long as you will.

There are always risks - you just need to determine which risk you want to take - inflation, stock/bond market, or reliance on some other entity to manage your money.

I've never had a high-paying job but have always been very careful with my money, and I always thought that the cushion I've built up would ensure security later. But jeez, if $4 million doesn't even cut the mustard (and believe me, I don't have $4 million saved), how the heck does anyone ever retire??

Getting higher returns than CD rates and cutting expenses, often by downsizing or having a paid off house.

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