The Powerball jackpot for Saturday’s drawing (January 6, 2018) is estimated to be $550 million (that’s over half a billion dollars), and may yet climb, making it the eighth-richest lottery jackpot in U.S. history.
As ABC News reports, Wednesday night’s Powerball drawing came and went without a jackpot winner, rolling over the $460 million prize pool into Saturday night’s draw. In case you were wondering, here are the numbers (although you didn’t win, or else you wouldn’t be reading this article): 2, 18, 37, 39, and 42, and the Powerball number was 12.
What a lot of lottery players don’t realize is that you’re given a choice when you win a huge jackpot like that. You can take the annuity option, which equates to the advertised jackpot paid out in 30 yearly payments over the course of 29 years, or you can take the cash option, which equates to about 63 percent of the advertised jackpot in one lump-sum payment.
Using Saturday’s estimate of $550 million as our guide, here’s how it works out in practical terms. If you took the annuity, you’d get 30 payments of $18,333,333.33 (before taxes) between now and 2047. If you don’t already, you will likely have grandchildren by that time.
If you took the cash option, you’d get a single payment of $348 million, before taxes.
As for how much of a hit you’ll take in taxes, that depends on a variety of factors, not the least of which is what state you live in. To get a rough estimate, we turn to a 2016 Time report. At the time, the Powerball jackpot was over a billion, and lottery fever was considerably higher than it is now. Anyway, in a general sense you can expect about 40 percent to go to the tax man.
Still, that leaves you with $10.998 million per year if you go annuity, or $208 million all at once if you go cash. Either way, it’s a ridiculous amount of money.
So which route should you go? That’s a decision you’ll have to make with your financial adviser (and by all means, hiring a financial adviser should be the first thing you do, even before you turn in your winning ticket). Not for nothing, as of January 2016, only four jackpot-winning lottery winners had gone with the annuity since 2003 (that number may have gone up since the writing of the Time article that made that claim).
By the way, if your Powerball dreams don’t pan out, you’ve got Mega Millions to fall back on. The jackpot for Friday’s Mega Millions drawing isn’t far behind the Powerball jackpot, sitting at $445 million.
Saturday’s Powerball drawing will take place at 10:59 p.m. Eastern Time.