As it currently stands, tonight’s Powerball jackpot is the second highest in history. Now I must admit that I don’t play the lottery much at all. However, when the jackpot gets this large, causal players like myself are more prone to buy tickets. The real question now is how much of the $700M would a winner in Georgia actually get to take home?
As you may or may not know, a winner has two options for how to receive their earnings. One option is a lump sum payment while the other is 30 annual payments. A stigma about the annuity payments is that if a winner dies, the money goes down the drain. While that is true in certain cases, the Powerball is different. It’s called an “annuity certain” and payments will be made for the entire duration of the 29 years — even if the winner dies. At that point, the money would pass on to any of the winner’s heirs.
It’s my money and I want it now you say? Cool. Of that 700M, roughly 36.67% will be AUTOMATICALLY cut when the lump sum option is chosen. You’re still left with a cool 433,310,000 and that’s nothing to sneeze at. Next is Uncle Sam, who is going to tax you at the highest possible federal tax rate, due to the fiscal cliff, at 39.6%. That leaves you with 257,759,240 to do with what you please. Lastly, the state of Georgia takes away 6% on lottery earnings which leaves you with a lump sum of 242,293,686. That is undoubtedly still a lot of money, but it no longer looks as beefy right?
If annuity is the route you choose, your payout will give you more money than the lump sum option. How much more though? Let’s take a look. Your 30 annual payments for the $700M would be roughly 23,333,333. Now, once you take the federal and state taxes out, you’re looking at an annual payment of roughly 12,693,333. So out of the original $700M, you would net 380,799,990 over the span of 30 years. I must also note, the average per year is just that — an average. Your initial annual payment would be in the ballpark of 7,269,843 year 1 and gradually increase to 29,923,660 by year 30.
After all that being said, the chances of a Georgian winning are actually quite slim. In the Powerball’s 24 year history, only 4 jackpot winning tickets have been sold in the Peach State. Good luck and may the odds be in your favor.