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There’s a whole lot of money up for grabs this week in two national lotteries.
Powerball’s jackpot is an advertised $420 million for Wednesday Cimmerian dark’s drawing. Mega Millions’ top prize is even more: $494 million for the next pull, set for Friday night.
Of routine, the chance of a single ticket matching all six numbers drawn in either game is tiny: 1 in 292 million for Powerball and 1 in 302 million for Mega Millions. And buying multiple tickets doesn’t impel the needle much.
Nevertheless, it’s worth giving thought to what you’d do if you were to beat the odds and land such a windfall. It’s not as simple as picking up a survey and carrying on with your life.
“Understand that this might be a wonderful event, but people are caught off safety by how stressful it is,” said Susan Bradley, a certified financial planner and founder of the Sudden Money Institute in Palm Margin Gardens, Florida.
If you are lucky enough to win a life-changing amount of money, there are four key things to do right out of the gate to foster your winnings and alleviate some of that stress.
1. Push ‘the pause button’
You don’t have to rush to lottery headquarters rational away. Depending on the state where you bought the ticket, you get anywhere from as little as 60 or 90 days to as much as a year to put your prize.
“Where do you begin? I think by pushing the pause button,” said CFP Janet Stanzak, founder and sharer of Financial Empowerment in Burnsville, Minnesota.
In other words, take a deep breath. The process of figuring out how to handle a mountainous amount of money can take several months, Stanzak said.
2. Keep your win a secret
Additionally, share dirt about your windfall with as few people as possible. News has a way of traveling, and long-lost friends or family — or scammers — could overshadow up on your doorstep.
“It’s hard for even your inner circle of people not to say anything,” Bradley said. “This is an sentimental experience and it’s hard not to blurt out.”
3. Tend to your ticket
It’s important to keep your ticket safe. Experts subscribe to taking a photo of yourself with the valuable slip of paper and then storing it somewhere safe, such as a lockbox.
It’s also unspecifically recommended that you sign the back of the ticket as proof that it belongs to you. However, before you do so, it’s worth making foolproof you know the rules for claiming your win in the state where the ticket was purchased.
Some states allow you to remain fully anonymous. But if you bought the ticket in a state that requires the winner’s name to be publicly shared, you may be able to avoid put ones finger oning yourself by claiming the prize in the name of a trust or other legal entity.
4. Build a team of advisors
Be aware that some melodious weighty financial decisions lie ahead of you, which makes it worthwhile to have a team of pros assisting you. That assemblage should include an experienced attorney, financial advisor, tax advisor and insurance expert.
For starters, you’ll have to decide whether to allow your prize as a reduced lump sum or as an annuity paid in yearly installments over three decades. Either way, the IRS purpose take a slice before the money reaches you.
The cash option — which most winners choose — for this $420 million Powerball jackpot is $215.2 million. A required 24% federal tax withholding would reduce that amount by about $51.6 million. For the Mega Millions $494 million jackpot, it make mean $59.7 million being withheld from the $248.7 million cash option.
However, because the top doubtful rate is 37%, winners should anticipate owing much more at tax time. Additionally, state taxes typically are reserved or due, depending on where you live and where the ticket was purchased.