Powerball Jackpot Grows To $750 Million, But If You Win, How Much Money Will You Actually Get?
There was no winner in Saturday’s $625 million Powerball drawing, which means that the estimated jackpot sits at $750 million. But if you win that kind of money, how much are you actually going to get?
As CNN reports, no one matched the winning numbers, which are 24, 25, 52, 60, and 66 and Powerball 5. That means that the potential exists for a single lucky winner to take home three-quarters of a $1 billion. What’s more, if the jackpot stays where it is (it may very well grow), it would be the fourth-highest lottery jackpot ever paid out in the United States.
Don’t conclude, however, that your state’s Lottery Commission is going to simply cut you a check for $750 million when you win; that’s not how this works.
First, according to CNBC, you’ll have to decide whether you want the cash-value or the annuity value of the jackpot. The annuity is the advertised jackpot paid out to you over 25 years; in this case you’d get $30 million (before taxes) over 25 years. The cash value is about 62 percent of the advertised jackpot (putting aside some nuance) — in this case you’d get $465.5 million (before taxes).
Of course, it doesn’t take an advanced degree in finance to know that $750 million is more than $465.5 million. But you’ve probably already noticed the downsides to taking the annuity payment. For one thing, those checks could very well be going to your next-of-kin by the time you receive your last $30 million. For another, while $30 million is an unimaginable amount of money, if you’re like some Americans, you may just decide to go big or go home, and take as much as you can get all at once.
Powerball grows to $550 million as jackpot goes unclaimed again https://t.co/a3ux0wT7tq pic.twitter.com/h5YwQn9hfM
— ABC 7 Chicago (@ABC7Chicago) March 17, 2019
And there are tax implications, regardless of which route you take. Again, putting aside some nuance, whoever issues your check will automatically withhold 24 percent for federal taxes; and that’s just a starting point. The top marginal tax rate is 37 percent, and this is almost certainly top-flight money, so be prepared to kiss at least a third goodbye.
Before state income taxes that is.
So, putting aside state taxes, if you took the cash-value, you’d take home $293.3 million when all was said and done. If you took the annuity each year, each annual check would be $18.9 million. Of the course of the jackpot’s life, you’d take home $472.5 million (excluding state taxes).
Of course, it may not matter anyway. Statistically, if you win the lottery, you’re likely to go broke again anyway. According to the National Endowment for Financial Education, 70 percent of lottery winners go broke again. So please, if you do win the Powerball — or any gargantuan lottery jackpot — make sure that the first thing you do is hire a trusted financial adviser.
The $750 million Powerball jackpot will be drawn on Wednesday, March 27, at 10:59 p.m. EDT.
