If you’re fortunate enough to win tonight’s Powerball jackpot of $650 million are you choosing the lump sum in cash or taking the annuity over time?

Let’s dream...

Courtesy of omnicalculator.com
Courtesy of omnicalculator.com
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Tonight’s lump sum would be over $328 million before taxes.  After taxes, it’s about $195 million.  That’s not $650 million, but you’ll manage.

If you take the annuity, you get paid over 30 years.  The first payment will net you $5.7 million while the 30th payment is almost $24 million.

It should also be noted with the annuity, you’ll get $182 million more than the lump sum. You really can’t go wrong either way, but we’ve all heard about the lottery winners that go broke.

Courtesy of omnicalculator.com
Courtesy of omnicalculator.com
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If you take the lump sum, have a little fun, take care of a few relatives, but put a huge percentage away (90-95%), you should be all set.  In this case, you’re earning the interest vs the lottery.   Even just 5% returns on $185 million is more than $9 million a year.

Courtesy of omnicalculator.com
Courtesy of omnicalculator.com
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On the other side, with annual payments, you’ll get a check every year, like former New York Met Bobby Bonilla.  He was owed 5.9 million dollars in 1999, but he and the Mets agreed to deferred payments with interest.  So instead of almost 6 million, Bonilla will end up with 30 million.

This may also help with the people trying to separate you from your money since you won’t have that huge sum up  Also, it feels like it would be much easier to say no if you’ve got a 5 million check vs $195 million.

Before you claim your winnings, experts suggest finding an attorney and CPA to help you manage your new found wealth.

Best of luck.

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