We’re now looking at an approximately $1.4 billion prize for the national Powerball, and as more people jump into the pool that number keeps going up. If you’re buying tickets, AICPA offers a plan to help you manage your prize if you win. But first, Salon reminds us just how likely it is that any individual will beat the odds of 292.1 million-to-1:
- The odds of a Powerball ticket winning the grand prize are about three times worse than the odds of successfully contacting Kim Kardashian by dialing a random cellphone number, and then hoping her phone happens to ring (There are just over 300 million mobile phones in use in the U.S., and Kim says she currently has three of them).
- If you are a 20-year-old man, the odds of your ticket winning are somewhat worse than the odds you will die in the next two minutes. (The odds of an average 20-year-old man dying on any particular day are about 350,000 to one. Since there are 1,440 minutes in a day, that makes the odds of a 20-year-old man dying in the next two minutes 252 million-to-1. )
If You Win
- Stay quiet. If you broadcast your good luck, hackers will see you as a prime target. Besides that, if you tell all your friends, they’ll be asking you for money — which can make any friendship awkward.
- Live life as normal, until you’ve clearly thought through exactly what you’re going to do with your winnings and how you’re going to live moving forward. Many lottery winners end up depressed because they assumed money would make them happy — and they stopped doing the things in their lives that they actually received enjoyment from. You may want to leave your job, but don’t quit working altogether. Enjoyable work contributes to happiness — so you might want to go back to school and change careers, or simply find a different job.
- Find out how much you’re actually pocketing. The jackpot now is up to $1.4 billion. But winnings of more than $5,000 are subject to a 25% federal withholding tax, and the actual federal tax rate is likely to be higher (possibly as much as 39.6%, depending upon other factors such as income, deductions and residence). Your winnings may also be subject to state and local income taxes.
- Pay off debt. This step is common sense, but it’s easy to overlook in the excitement of winning. Before you get to spending, be sure you’ve paid off all debt.
- Create a savings plan. Your lottery winnings can continue to pay out if you put some of the money into an interest-bearing accounts. Even just a $10 million deposit into your savings account would net you up to $100,000 annually. And beyond a savings account, there are CDs and mutual funds that can earn more.
- Think about the future. When you come upon a large sum of money, it’s tempting to think it will last forever. (And $1.4 billion is a rather large amount.) But when you get to spending, especially on big-ticket items, it can go much faster than you expected. Set aside money for college funds and other future goals.
- Support charity. Of course it’s always great to give back. And remember that charitable contributions are tax-deductible.
As Salon pointed out, you’re not likely to need this advice. But if you’re playing, good luck!