The current Powerball jackpot, which has been building since May, has grown again ahead of Wednesday’s jackpot. Originally estimated at $1.3 billion after Monday’s drawing, the grand prize is now at $1.4 billion, Powerball officials revealed.
At its current estimated size, the Powerball jackpot ranks as the fourth largest in the game’s history, behind a 2016 prize worth $1.59 billion split by three tickets. It also stands as the sixth-largest across Powerball and Mega Millions, behind a $1.54 billion Mega Millions jackpot hit in 2018.
Top 10 largest Powerball, Mega Millions jackpots
- $2.04 billion (Powerball): Nov. 7, 2022; California
- $1.765 billion (Powerball): Oct. 11, 2023; California
- $1.602 billion (Mega Millions): Aug. 8, 2023; Florida
- $1.586 billion (Powerball): Jan. 13, 2016; California, Florida, Tennessee
- $1.537 billion (Mega Millions): Oct. 23, 2018; South Carolina
- $1.4 billion (Current Powerball jackpot)
- $1.348 billion (Mega Millions): Jan. 13, 2023; Maine
- $1.337 billion (Mega Millions): July 29, 2022; Illinois
- $1.326 billion (Powerball): April 6, 2024; Oregon
- $1.269 billion (Mega Millions): Dec. 27, 2024; California
Though the jackpot has crossed such a monumental benchmark after an apparent drought, a winner in Wednesday’s drawing wouldn’t walk away a billionaire. At best, after taxes, the total annuitized prize a winner could receive is slightly more than $800 million. If they opted for the cash prize, now estimated at $634.3 million, they would receive around $400 million. In some states, it would be far less.
Suppose you win the Powerball jackpot on Wednesday. Regardless of whether you select 30 annuitized payments or the cash payout, it’s still likely more money than you’re carrying around now (unless you’re secretly one of the wealthiest people in your state).
Let’s say you do overcome the 1 in 292.2 million odds and win big Wednesday night. There are a number of steps experts suggest taking, like building your team — a financial advisor, a tax advisor and a lawyer are highly recommended — and keeping the ticket secure.
Then you’ll want to decide whether to take the annuitized or cash payouts.
The annuity option is the dollar amount you’ll most frequently see advertised when it comes to both Powerball and Mega Millions. While the former likely has your attention now, the latter is nothing to sneeze at: $336 million, with a cash value of $151.3 million.
If you were to select the annuitized option in either game, you’ll receive a one-time payment, followed by 29 annual payments that increase by 5% each time until they reach the amount you won.
The cash option, meanwhile, signifies the amount of money game officials have determined is needed to fund the annuity option. That’s the physical cash on hand that has accumulated during the current jackpot run.
If you want your winnings right away, you’ll want to select the cash option, but if you want more money in the end, you may prefer the annuity option.
So how do you know what’s best for you?
“Most people take the lump sum because they want the money, they want to control it,” Robert Pagliarini, president and chief financial advisor for Pacifica Wealth Advisors and author of “The Sudden Wealth Solution,” previously told Nexstar. “I honestly think most people are probably better off taking the annuity.”
As mentioned, the annuity option means you’ll receive a check every year with another, slightly larger portion of your lottery winnings. While that annual allowance may sound annoying to a newfound jackpot winner, it can also help protect you.
For example, let’s say you mess up with your winnings one year. Maybe you spend it unwisely, make some poor purchases, or gift too much away. If you had selected the cash option, “there’s no do-over, there’s no reset,” Pagliarini explained.
“But with the annuity, you get to redeem yourself every single year,” he added. “It might take a few years, it might take five or six years, but eventually you’ll figure it out.”
You’ll also see more taxes are withheld if you select the lump sum cash payout. Every state is required to withhold 25% in a federal lottery tax, and after additional withholdings, you’ll be losing roughly 37% of your jackpot to taxes. Then, depending on where you live, you’ll see even more withheld for state taxes.
However, Jeremy Keil, a financial adviser from Wisconsin, previously told the Associated Press that “there’s no bad choice” when it comes to the payout you select. Keil said Powerball’s annuity assumes a 4.3% investment gain of the jackpot’s cash prize.
“If you think you can beat the 4.3%, you should take the cash,” Keil said. “If you don’t, take the annuity.”
Matt Chancey, an investment adviser in Tampa, Florida, also urged winners to understand that if advisers earn a percentage from the investment of all that money, they have a financial stake in how the money is paid out and should be clear about any potential conflict. He said talented investors could probably make more money than a winner could be paid through an annuity, but there is risk and advisers need to be open about their potential gain depending on the jackpot winners’ choices.
Regardless of what option you pick, if you win either jackpot, Pagliarini recommends building your team of experts, signing the ticket and keeping it secure. And “make [your payout] decision as fast as you possibly can, in a way where you feel very comfortable about the decision,” Pagliarini said.
Powerball tickets are $2 each and are sold in 45 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Drawings are held every Monday, Wednesday, and Saturday at 10:59 p.m. ET.
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