The Powerball jackpot for Tuesday’s drawing will reach nine figures for the first time since February 19, as the numbers drawn Saturday night proved to be the sixth straight combination to match no ticket. With no winner of Saturday’s $94 million jackpot, the top prize now leaps by $16 million — to an enticing $110 million sum.
The nine-figure Powerball jackpot would go to a winner who selects the annuity option, which pays one check per year for the next 30 years, including 2014. But those checks would average $3,666,667 — not a bad annual income.
The “cash value” of the next Powerball jackpot, that is, the amount paid to a winner who demands the whole amount in one big, fat check, will be $64.4 million.
There are advantages and disadvantages to taking the lump sum versus the annual payments. Powerball and other lotteries fund their jackpot with a bond, and the value of that bond is determined the by the interest rate. The “cash value” of a lottery jackpot is the total amount — in this case, $110 million — minus the interest the lottery will pay over 30 years.
When interest rates are low, as they are now, the value of the lump sum payment is higher. It’s as if the Federal Reserve, by holding rates down as it has for several years, is paying a bonus to lottery winners.
About 98 percent of Powerball winners take the lump sum payout, according to financial consultant Don McNay, who specializes in advising people who come into sudden wealth such as lottery jackpots, lawsuit awards and large inheritances.
But McNay says he always advises clients to take the annual payment option.
“At least 70 percent of winners run through the money in five years or less,” McNay says. “It doesn’t make any difference whether they win $1 million or $100 million.”
In other words, if you choose the cash option, you’d better trust yourself. But with no Powerball winner Saturday, that advice doesn’t apply. There was only one ticket that matched five numbers, sold at a liquor store in California’s Mojave Desert, which will pay $1,120,480 under the state’s pari-mutuel payout system.
But of the 15,993,806 tickets sold, 484,567 were good for at least some amount of cash. Was yours one of them? Check your Powerball ticket against the following numbers, drawn at 10:59 pm in Tallahassee, Florida.
14 — 26 — 45 — 54 — 55 Powerball 20
The $110 million Powerball drawing will be held Tuesday and with no winner then, the jackpot will soar higher into that nine figure stratosphere.