Canadians plan on lottery winnings, inheritance to secure financial future

You have a better chance of dying from a toppling vending machine or being hit by an asteroid than you do of winning the lottery. In fact, your chances of winning the lottery in Canada are anywhere between 1 in 13.9 million to 1 in 28.6 million.

Yet one-third of Canadians are banking on a huge jackpot or inheritance windfall as part of their long-term plan for financial success, according to a new survey from Capital One Canada and Credit Canada Debt Solutions.

"It's troubling to see so many Canadians putting more trust in the lottery than sound financial planning — but I see the effects every day in our agency," Laurie Campbell, CEO, Credit Canada Debt Solutions said in a release. "Canadians need to recognize that there is no magic solution to gaining control of their finances. It means hard work and sticking to a budget determined by income."

And it appears these startling findings aren't a one-off. A whopping 32 per cent of Canadians aged 45 to 64 said they expect lottery winnings to support them in their retirement versus 34 per cent who will fund their retirement with savings and investments, according to a 2011 survey by Environics Research and TD Waterhouse.

Do these lottery optimists know something the statisticians don't? The odds are astronomical, yet Canadians continue to throw money at the chance to win big.

The lottery is the country's most favourite form of gambling, with sales reaching $8.5 billion in 2011.

A quarter of Canadians play the lottery weekly, spending roughly $265 per household annually on the hopes of finding the golden ticket. Who is spending the most? Newfoundland and Prince Edward Island drop approximately $290 a year on government lotteries with Alberta taking the third spot with $285. Residents of British Columbia spend the least at $240 annually.

Approximately 60 per cent of people living alone reported spending money on at least one gambling activity in 2011, according to Statistics Canada. Men spend nearly twice as much as women: $615 compared with $335. But the payouts don't match the funds invested.

Take Lotto 6/49, for example, your odds of matching 6/6 numbers -- in Ontario alone -- are 1 in 13,983,816. Your odds get drastically better the smaller the prize money gets. If you match 3/6 winning numbers your odds drop to 1 in 56.7 for a $10 prize. That means if you play the lottery every week -- you're likely to win $10 at least once within 13 months. If you purchase the cheapest ticket available, which will run you $2, you're spending more than $100 per year for a potential payout of $10.

A smarter investment? If you took the $615 mentioned above and invested it every year, assuming a 6 per cent rate of return compounded annually, you would have $8,592.55 in 10 years rather than a garbage can full of useless lottery tickets. Don't leave your financial security to lady luck.