Note to FDIC: Lottery Tickets Can Spur Retirement Savings

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By Mara Der Hovanesian

July 7, 2009 at 4:00 AM UTC

This article is for subscribers only.

They say that buying a lottery ticket is like buying a dream for 24 hours: The chances for winning the jackpot are minuscule, but it’s not a bad short-term fantasy for the price of a buck. The problem is too many Americans spend far more than $1 for that fleeting moment. One report showed households with incomes under $12,400 spent an average of $645 on lotteries, or about 5% of their gross income every year.

So FDIC Chairwoman Sheila Bair has an idea. She’s directed her staff to draft a pilot program for a lottery-linked savings plan. How would it work? People would buy into savings bonds that have a lottery component to them. In other words, you make an investment in savings and simultaneously put a chip on the table for possibly winning a big pot in a drawing of sorts. The details are still to be ironed out.