The Powerball jackpot has surged to a staggering estimated sum of $1.2 billion, marking the third-largest prize in the history of the game. The drawing on Monday night yielded no jackpot winner.
For the fortunate winner, a crucial decision lies ahead: whether to opt for a lump sum payout of $551.7 million or to receive the prize as a series of annuitized payments totaling $1.2 billion, with both options representing pretax estimates.
The next opportunity to win the Powerball jackpot will be on Wednesday at 11 p.m. ET, although the odds of securing the grand prize stand at a daunting 1 in 292.2 million.
While the lump sum payment offers the entirety of the prize upfront, the annuity provides an immediate payment followed by 29 annual installments, each increasing by 5% annually, as explained by Powerball.
Andrew Stoltmann, a prominent attorney based in Chicago who has represented numerous lottery winners, voiced an opinion that choosing the lump sum distribution is often a misstep. He argued that the annuity can be a superior choice because most lottery winners lack the infrastructure to manage such a substantial sum rapidly. Stoltmann asserted that the annuity safeguards winners from financial missteps in the early years while preserving the majority of their winnings.
John Loyd, a certified financial planner and enrolled agent at The Wealth Planner in Fort Worth, Texas, echoed this sentiment. He emphasized that flexibility and control over assets may not be suitable for everyone. While the lump sum payment could make sense for certain winners, others may benefit from the financial discipline provided by annuitized payments.
However, Loyd cautioned that some winners might eventually decide to sell their annuity to a third-party company for a lump sum payment, but this might not yield the best financial outcome.
Wednesday’s Powerball drawing arrives less than three months after a single ticket in California secured the game’s $1.08 billion jackpot. Remarkably, this marks the first instance of consecutive billion-dollar jackpots in the game’s history. Meanwhile, the Mega Millions jackpot currently stands at an estimated $315 million, with the odds of clinching the grand prize standing at approximately 1 in 302 million.