4. Decide whether to take the lump-sum or annuity payments
One of the hardest things you'll have to do, should you win the Powerball jackpot, is decide whether to take lower lump-sum payment right now, or receive the full prize in the form of annual payments for the next 30 years. With the current $1.5 billion jackpot, you'll likely take home about $930 million before taxes, which vary by state (but will probably be another big chunk of it), if you choose the instant payout route. That's the no-brainer way to go if you want hundreds of millions of dollars dropped into your bank account right away and don't want to have to deal with the annuity payments for the next three decades -- even if that means you'll get less. Most people take the cash.
However, a recent article fromThe New York Times has put forth an interesting and surprising case for choosing the annuity payments. Among other points, like protecting your hoard of cash from yourself, the article claims you'll end up paying less in taxes on more money if you're willing to take the annual payments:
"[T]here are big tax advantages to the annuity. The main one is that taking the annuity is basically like letting the government hold onto part of your prize for a while and invest it for you — and the government does not pay tax on investment income. Of course, once you get the annuity checks, you’ll have to pay income tax on them. But if you take the lump-sum cash prize, you’ll pay tax twice: on the prize when you win it, and on the income you get by investing it." Interesting, right? Read the full post here.
5. Get a financial advisor
Unless you have several years of experience managing hundreds of millions of dollars in cash and assets (if so, why are you playing the lottery?), you're probably not qualified to make good decisions on what to do with your new billion dollar windfall. Granted, you've already retained attorneys, but you'll likely need one more person on your team for when you're ready to start using your money, especially if you're planning on investing it. This person could also act as your first defense from people asking for money.
As Ric Edelman, chairman and chief executive officer of Edelman Financial Services, explained in the TODAY report, "[G]et a financial planner and make no financial decision without that person's guidance. Use that person as a buffer with all those who ask you for money -- this will help insulate you and protect your relationships."
6. Try to act normal
This sounds impossible, considering you'll soon be swimming in cash the rest of your life. But it could lead you to make bad decisions that could, well, cost you.
Consider the case of these New Jersey restaurant workers, who did the exact opposite of acting normal when they thought they'd won the $900 million jackpot last weekend, according to a report by NBC New York. At least one of the workers promptly quit his job, under the assumption that he'd never have to work another day in his life. That is, until they realized they were looking at the wrong numbers -- the old winning numbers from a previous drawing. Whatever you do, don't be that person, even if you're certain that you won.
There will be plenty of time to party, buy everything you've ever wanted and more, and tell your boss to go fuck himself. Book a trip somewhere to escape for a bit if you need to get away from prying family, friends, and temptation. You've gone all this time without having tons of money, so why would a wise person like yourself suddenly abandon reason for madness (yes, that's another LOTR reference)? Ultimately, you should do what you usually do -- go pick up some beer or a bottle of decent whiskey, order a pizza, and kick back -- but this time with the comfort of knowing that you're one of the few people in this world who've got it made. If you don't blow it.
As the convenience store workers would say: Good luck.
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Tony Merevick is Cities News Editor at Thrillist and, full disclosure, bought a ticket. Send news tips to email@example.com and follow him on Twitter @tonymerevick.