Powerball Jackpot Soars to $1.8 Billion: Expert Advice on Lump Sum vs. Annuity
Powerball Jackpot Soars to $1.8 Billion: Expert Advice on Lump Sum vs. Annuity
As the Powerball jackpot reaches an estimated $1.8 billion for Saturday night’s drawing, lottery fever grips the nation. For the fortunate individual holding the winning $2 ticket, a critical decision awaits: whether to accept a lump sum payment or opt for annual installments.
Winners face the choice of an immediate cash payout, estimated at roughly $826.4 million before taxes, or an annuity structured as 30 graduated payments over 29 years. Both options are subject to significant federal and state tax deductions.
Dan Geltrude, a certified public accountant in New Jersey, advises caution. While he personally favors the lump sum due to his comfort with investment management, he warns that such a vast sum can be ‘dangerous’ for many. Geltrude notes a history of lottery winners overspending and ultimately going broke.
Choosing the annuity offers a ‘safe bet’ against rapid depletion of funds, providing a more controlled distribution over time. However, Geltrude points out that even with an annuity, high-tax states like New York or New Jersey could reduce the net winnings to approximately $400 million after federal and state taxes.
Regardless of the payment method, Geltrude offers crucial initial advice for a new millionaire: ‘Do not tell a soul that you won. You need to keep this quiet.’ He recommends signing the ticket, securing it, and immediately seeking counsel from an attorney, a certified public accountant, and a financial adviser. His primary financial guidance is to pay off all existing debts before making any other plans. The odds of winning the jackpot stand at 1 in 292.2 million.
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