With the Powerball jackpot now an estimated $1.8 billion for Saturday night’s drawing, there’s lottery fever in the air. If you’re the lucky one whose $2 ticket ends up worth millions, what do you do with all that money?
Jackpot winners have the option to either take a lump sum payment of the estimated cash value — in this case, roughly $826.4 million — or they can opt to receive their prize as an annuity, paid in 30 graduated payments over 29 years. In either case, those totals are before the Internal Revenue Service takes a cut, as do most states.
Should you take a lump sum payment or annuity option?
Dan Geltrude, a certified public accountant in New Jersey, told CBS News: “I personally would take the lump sum payment because I feel comfortable in how I can invest my money. However, having that much money for a lot of people is dangerous.”
Saturday’s jackpot is now the second-largest in U.S. lottery history, with an estimated cash value of $826.4 million, according to Powerball. The record $2.04 billion grand prize was won on Nov. 7, 2022, in California.
A financial windfall this big has the potential to change your lifestyle in significant ways, especially if you take the lump sum payment — and Geltrude says people do “simply overspend, even with that kind of money.”
He notes many lottery winners over the years have ended up going broke.
If you opt for the annuity payment, “it will take you a while to lose all that money, so that’s the safe bet,” Geltrude said.
“But when you factor in the tax man, and the tax man is both federal and state, you only end up netting, if you’re in a high-tax state like New York or New Jersey, only about $400 million,” he said.
What should you do with your Powerball jackpot money?
Money can’t buy love, “but it’ll buy you a lot of friends,” Geltrude said, making you “a magnet for everybody that’s going to be asking you for money.”
So, what to do if you find yourself millions of dollars richer come Sunday morning?
“Do not tell a soul that you won. You need to keep this quiet,” Geltrude said. Sign the ticket, put it in a safe place, and keep it on the down-low. You’ll want to seek out an attorney, a certified public accountant and a financial adviser, Geltrude said.
As far as your plan for your money, Geltrude’s advice isn’t flashy: Start by paying off all your debts.
“You want to get back to even,” he said. “Now you have a bunch of money to figure out what it is that will make you happy.”
The odds of winning the jackpot are 1 in 292.2 million, according to Powerball. Drawings take place every Monday, Wednesday and Saturday at 11 p.m. ET. Tickets are sold in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Taylor Johnston and
contributed to this report.
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