Lump Sum

Some lottery winners go broke. Some athletes and entertainers amass millions and go bankrupt. Regular people every day squander inheritances, court settlements and salary bonuses. Why? Because it's hard to spend money well. And spending a windfall well is even harder. Windfalls, especially sizable ones, can be life-altering. They could provide a more comfortable lifestyle or blaze a path to self-destruction. Up to 70 percent of people who receive a large lump sum of money blow it in a few years, according to the National Endowment for Financial Education.

Charts and tables that show future retirement benefits usually assume that a person will stay in the same job until they retire.But for many people, especially women, that's not true. For a variety of reasons -- raising children, caring for children or elderly parents with long-term illnesses, or following their husbands to new jobs in different cities -- women are far more likely than men to have breaks in their careers. And those breaks can cost them a lot of money when they retire.Women who leave the work force for even a few years can lose as much as half the retirement benefits they would have received had they kept working at one job, according to a recent study by the Bureau of National Affairs.

Take this mini-quiz: 1. If the chance of getting a disease is 10 percent, how many people out of 1,000 would be expected to get the disease? 2. If five people all have the winning number in the lottery and the prize is $2 million, how much will each get? 3. You have $200 in a savings account that earns 10 percent in interest each year. How much would you have in the account after two years? Answers are below. But if you're like most who have taken the test, from the University of Michigan's Health and Retirement Study, you won't ace it. When 1,700 boomers in their 50s took the test a few years ago, most got the first question right.

Hoping to entice veteran police officers to remain longer, Howard County is planning to join other area governments that have adopted a deferred pension deal that kisses retiring officers goodbye with a big wad of cash. "We all compete in this same region. It helps us plan," said Howard police chief Wayne Livesay, a 32-year veteran who explained that the pension plan would allow him to know which senior officers would remain and for how long. "If I have someone with 25 years, I know I've got them for the next three or four years," he said.

WASHINGTON -- Participants in the Civil Service Retirement System can earn a whopping 7.125 percent interest rate on an investment program called the voluntary contributions plan.Contributions to the plan are invested in special government securities that are guaranteed to earn 7.125 percent in 1993.The interest rate, which is calculated annually based on earnings from the previous year, has been dropping about three-quarters of a point a year since the mid-1980s. But next year's rate is still about twice as high as that for many certificates of deposit at commercial banks.

NEW YORK -- Marriott International Inc., CVS Corp. and 40 other companies that hire low-wage workers are urging their employees to collect a tax break in their paychecks rather than paying fees for tax-preparation services and loans to get it as a lump sum once a year. The group, representing businesses employing 4 million people, is distributing flyers, stickers, posters and other educational tools to company managers to encourage employees to sign up for the little-used version of the earned income tax credit.

T he number of debt-settlement companies nationwide has grown into the thousands as more strapped consumers are turning to them to help wipe away debt. But complaints are also on the rise, with some consumers saying they ended up in worse shape financially after going to a debt settler. Meanwhile, the companies go largely unregulated. This year, Maryland's General Assembly is expected to take up the matter for the third year in a row. Let's hope the third time is a charm.

One of the toughest decisions faced by thousands of workers each year is whether to accept an employer's buyout offer. Is a lump sum of cash, perhaps amounting to tens of thousands of dollars, worth giving up a regular paycheck and company benefits? Will workers lose their job anyway if they don't take a buyout? Or will the company come back with an even sweeter package if they hold out? Companies sometimes offer buyouts after mergers to get rid of duplicate positions. But these enticements to leave the job often come from businesses financially ailing and looking to cut costs.

After less than a minute of discussion, the Baltimore City Council on Monday overwhelmingly confirmed Anthony W. Batts, the former police chief in Long Beach and Oakland, Calif., as Baltimore's newest police commissioner. No one on the 14-member council voted against Batt's confirmation and only Councilman James Kraft abstained. He did not explain his position publicly. Councilman William H. Cole IV, who held a committee meeting last week in which community members spoke both for and against the new commissioner, made the motion to approve Batts' nomination.

In the running for the Nicest Boss in Maryland award is this guy, who just bought 200 Mega Million tickets and promised to share the winnings -- in a big, big way, with his workers. Dennis Kane of Kane Construction said he was the only winner, he'd pay the mortgages off of everyone in his company. And that was before he knew the jackpot was up to $640 million. Maybe now he workers will also get cars. Cost of tickets: $200. Value in corporate good will of making a pledge like this: Priceless.