You Win the Powerball Jackpot. What Now?


Let's Say You Win the Powerball Jackpot. What Now?

A newfound fortune can be a blessing—or a curse. Lottery winners will need help sorting through the decisions surrounding big money.


Sudden wealth. A large signing bonus as a first-round draft pick, or an incentive to take your management skills to a competitor? Neither one could match the payout of the January 2016 Powerball jackpot, now estimated to be $1.5 billion. That’s billion with a "b".

According to the World Bank, that’s more than the gross domestic product of about a dozen nations, among them Antigua, the Solomon Islands and Grenada!

See Also: How Much Tax You'll Pay on Your Lottery Winnings

Having advised professional athletes and lottery winners, I have some first-hand knowledge of the myriad of issues facing someone who suddenly has to make decisions on sudden wealth. But first, some interesting facts.

The probability of winning is 1 in 292.2 million. As reported by NBC in an interview with Jeffrey Miecznikowski, associate professor of biostatistics at the University of Buffalo, it’s like trying to count electrons or drops of water in the ocean or grains of sand on the beach. Or, he says, to put the odds in perspective, it would be the same as flipping a quarter and getting heads 28 times in a row. Nevertheless, millions believe that the combination of their grandmother’s birthdate and their own will bring them to the promised land.


If in fact you are the winner, here are some do’s and don’ts:

  • Double-check. No, triple-check. No, quadruple-check the numbers. The winner will have matched the five white balls and the red power ball. You can have six correct numbers, but unless you have matched the five white and one red you don’t get the jackpot.
  • That little slip of paper is all the proof that you have of your winning. Immediately take it to your bank and put it into a safety deposit box.
  • Tell no one. Well, maybe your significant other, or a trusted family member, but not until you’ve safely secured the ticket.
  • Do not, under any circumstances, post your good news on Facebook. You will have strangers at your front door before you close the app.
  • Remove, as best you can, all social media links to your persona, including Linkedin.
  • Begin the process of seeking professional financial help. You have plenty of time. Most states have a 180-day timeframe for you to come forward.
  • Seek a fee-only adviser, and interview at least three, but do not disclose your good fortune until you have had at least three meetings with him/her. You could fabricate a story that you might be receiving a $1 million inheritance in six months. You’ll want to gauge their demeanor and the efficiency of the office staff.
  • Your planner, once selected, will then serve as the quarterback for the legal and accounting team that will be necessary to help you navigate this uncharted territory.

You will need to decide whether to take your winnings in a lump sum or in an annual payment. This is where it gets a bit tricky, and sometimes confusing. Some folks mistakenly believe that by spreading the payments out you would pay less in taxes. All of the winnings, under current tax law, will be taxed as ordinary income, and taxes will be levied at the highest rate, currently 39.6%.

Assuming the tax laws don’t change over the next 30 years, all things being equal, you’ll pay about the same overall amount in taxes. And that’s the big “if.” Obviously, if tax rates rise from today’s levels, you may find yourself being taxed at substantially higher rates. Conversely, if you believe the tax laws will be totally revamped to a flat tax, consumption tax, or a value-added tax, then pushing the payments out to future years could be advantageous.

According to, the gross payout on a $1.5 billion prize would be $930 million before taxes. Slap on another 40% for Uncle Sam, and you're left with $561 million -- even less if your state has an additional tax. Washington, D.C., for instance, assesses another 8.5%, while New York claims 8.82%. There may be additional city and/or county taxes as well!


I’m often asked if there’s a way to shelter all the winnings. The short answer is no. Of course, there are tax-favored investments that can still be used to a limited degree; however, this is not the time to get super creative. You’ve probably seen stories of some professional athletes who were duped into buying into this real estate project or start-up restaurant chain only to lose all of their investment and be faced with tax penalties to boot.

Also, if you’re in an office pool, you'll need to follow some additional rules. Check out this interview I did with Fox 35 (Orlando) about winning the lottery.

If you are the lucky winner, the word to keep in mind is caution. Your life is about to change in ways you never imagined. There are stories of folks who have done marvelous things for their loved ones, as well as for society. There are also stories of folks whose lives ended tragically because of their sudden wealth. Powerball, a blessing or a curse...

See Also: Four Financial Pros Advise What to Do With Your Powerball Winnings

Joe Bert, CFP® is the Chairman and CEO of Certified Financial Group, Inc. and has been in the financial planning profession since 1976.

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