With the Powerball jackpot close to $400 million, you may be daydreaming about what you would do if you win.
Among past recipients of huge jackpots — whether Powerball or Mega Millions — some common themes emerge when it comes to how they intended to handle their sudden windfall, based on a review of recent winners’ stated intentions.
Of course, things don’t always work out as planned. There are reports of past winners whose excessive spending led to bankruptcy or whose families were torn apart after wealth entered their lives.
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To help navigate sudden wealth, experts say it’s crucial to hire a team of experienced professionals — including an attorney, financial advisor and tax advisor.
“You buy a very expensive house. You maybe start traveling privately. There are a lot of things you change in your whole lifestyle when it seems like an endless amount of money,” said certified financial planner Jennifer Weber, vice president of financial planning at Weber Asset Management in Lake Success, New York.
“If you live beyond your means, it could be bad,” Weber said.
For this jackpot, the cash option — which most winners choose instead of a 30-year annuity — is $274.6 million. The federal 24% tax withholding would reduce that amount by $65.9 million to $208.7 million, with more due at tax time. State taxes also typically are withheld or due.
While some states allow winners to shield their name from the public eye — which may involve claiming the money through a trust or other legal entity — others require your identity to be revealed.
Based on information shared by those public claimers, winners have some common reactions when they discovered they won. On top of a racing heart, some screamed or cried from joy. Another said he was so excited he couldn’t eat. Some claim their prize quickly, while others took weeks or months to do so.
Here’s a sampling of how past winners chose to move forward and what they said they’d do with their windfall.
The work factor
While not all Powerball or Mega Millions jackpot winners are in the workforce — some already are retired or otherwise unemployed — those who still get a paycheck have had a choice to make.
While you might be thinking “duh, I’d quit,” the decision might be a bit more complicated.
“If you’re not going to work, you need to think about what you’d do with your time,” Weber said.
A group of 23 coworkers in New York won a $437 million Mega Millions jackpot in January 2019. At the time, most of the employees said they would continue working because they consider one another family, according to representatives who claimed the prize.
If you’re not going to work, you need to think about what you’d do with your time.
vice president of financial planning at Weber Asset Management
Similarly, a group of 11 coworkers in California who hit a $543 million Mega Millions jackpot in July 2018 also said they wanted to keep working.
Contrast that with David Johnson, a 56-year-old truck driver from Brooklyn, New York, who wasted no time quitting his job when he won a $298.3 million Powerball jackpot in January 2019.
“I quit right away. No delay,” he said during a press conference.
Likewise, Manuel Franco, a 24-year-old Wisconsin man who won a $768 million Powerball jackpot in March 2019, was done with work, as well — he quit two days after winning.
And, he was prepared to fend off people asking for handouts: “I’m ready and I know how to say no,” he said at the time.
Many lottery winners mention helping their family right out of the gate. Bill Lawrence, a retiree in California who won $150 million in a December 2019 Powerball drawing, said he would buy a nice house and improve the lives of his family.
“Everyone is going to get a bump,” he said in a statement when his win was announced.
Likewise, Robert Bailey of New York, who also is retired and split a $687.8 million Powerball jackpot in November 2018 with another winner, said he would buy his mother a house and take care of the money “for the next generation in my family.”
One winner, Richard Wahl of New Jersey, however, drew a line. “Just because I knew you or you were a 10th cousin down the line way back when doesn’t mean I’m going to help — or I might,” he said after winning a $533 million Mega Millions jackpot in March 2018. “We haven’t completely decided.”
If you do share your new wealth with family, friends or anyone else, be sure you understand the tax rules applying to gifts.
Hitting the road
Many winners say they are going to go on vacation or travel. For example, Michael Weirsky of New Jersey, who won a $273 million Mega Millions jackpot in March 2019, said during his a press conference that he was “going to take a family vacation and take everybody with us.”
There can be a practical reason for going on vacation if you hit the jackpot. If you win in a state that requires your name — and sometimes other identifying information — to be made public, leaving town for a week or so might be wise.
Jason Kurland, an attorney who helps lottery winners, advises his big-jackpot winners to leave town right after claiming their prize.
“If you can avoid being around for a week, you might be able to escape the initial exposure,” said Kurland, a partner at Rivkin Radler, a law firm in Uniondale, New York.
Winners often pay it forward through charitable donations.
For example, 66-year-old Charles Jackson Jr. of North Carolina, who won a $344.6 million Powerball jackpot in June 2019, named specific groups he wanted to help.
“I want to do something good,” Jackson said in a statement at the time of his win. “I’m going to donate to St. Jude Hospital, the Wounded Warriors Project and the Shriners. I always said I would if I ever won the lottery. So I’m going to make due on that promise.”
Charitable contributions also provide winners with a tax break. You can make a cash donation of up to 60% of your adjusted gross income and carry forward, up to five years, any excess amount.
Some winners set up their own charitable foundation or similar option, such as a donor-advised fund, and donate a portion of their windfall to it.
Meanwhile, other stated goals by winners included paying off debt, saving for children’s college and buying new cars.