What should the sole winner of last night’s $754.6 million Powerball jackpot do today?
Sleep in? Quit your job? Maybe. But the most important thing is what not to do: don’t tell everyone.
The Powerball lottery jackpot ballooned to $754.6 million this year after going months with no winners. That is, until Monday night when one ticket sold in the state of Washington matched all six numbers to win the fifth largest jackpot in Powerball history, the ninth largest U.S. lottery prize ever, and the first of the new year.
Claiming that much money likely will draw taxes, grifters, and friends and family members, advisers say. All that attention means the first and most important piece of financial advice likely is what you should not do if you hold the winning ticket.
“Don’t shout your win from the rooftop,” Rob Burnette, financial and investment adviser at Outlook Financial Center in Troy, Ohio, said. “If you’re lucky enough to win the lottery, keep it quiet. Get organized and make a plan. Consider staying anonymous, if it’s a possibility.”
What are the odds of winning?
The $754.6 million prize is for winners who choose the annuity option, paid annually over 30 years. Most winners opt for the cash option, which was $407.2 million. Those are both before taxes.
The single chance of matching all six numbers is 1 in 292.2 million. Powerball tickets – which cost $2 each – are sold in 45 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Why shouldn’t you tell everyone?
“Scammers will even use the names and logos of legitimate lotteries to make their operation look credible,” Powerball said.
No representative of Powerball would ever contact you via email or social media to tell you that you’ve won a prize, unless you specifically entered an official lottery promotion or contest. Also, never accept a collect telephone call from someone claiming to be a lottery official. Legitimate lotteries do not call collect.
Also remember, “Do not send money! If you are asked to pay a fee to claim a prize, you are likely being scammed,” it said.
Don’t ever share your personal or financial information. Scammers may try to get this information from you by offering to wire “prize money” directly into your bank account, Powerball warns. And don’t ever agree to cash a lottery ticket for a stranger.
If you can’t tell everyone you won, what can, or should you do?
“Get a tax attorney and a tax accountant right off the bat and then a financial adviser,” said Azoury. “They’ll work hand in hand to figure out the plan.”
The plan will include which payout option to choose:
- An annuity option makes an initial annual payment followed by 29 annual payments. Each payment is 5% larger than the previous one.
- The cash option is a one-time, lump-sum payment equal to all the cash in the Powerball jackpot prize pool.
Should you take the lump sum or installment payments?
That decision depends on your goals, your age, and what lottery rules are for beneficiaries to continue receiving payments, or if you’d likely squander a lump sum.
Mark Steber, chief tax officer at Jackson Hewitt, recommends considering the following:
- Size of the lottery winning: That can serve as a guide to determining taxes you may owe and the financial security you can derive from it. If the amount is on the smaller side, a lump sum may simply be easier.
- Current and projected earnings: Consider your ability to earn money and tax rates over your lifetime.