How Should Michigan Residents Take their Powerball Jackpot Payout?
The Powerball jackpot for Monday, October 31st, 2022 is up to $1 billion! As a Michigan resident, when you win, should you take the 30 year payout or the lump sum?
The last time someone won the Powerball jackpot was on August 3rd. Since that time, the jackpot has continued to grow after 37 drawings and no winner.
The jackpot for October 31st is the second largest Powerball jackpot in history. The largest ever Powerball jackpot was $1.586 billion back on January 13, 2016.
If you win the jackpot, you will have to decide how you want your prize...spread out over 30 years or a lump sum of the cash value of the jackpot, which is about $497.3 million.
Should you take the 30 Year Payout or the Lump Sum?
This is the biggest decision you have to make when you win the jackpot. You could have your prize distributed over 30 years. That would be guaranteed income for the next three decades! But some things to consider include how taxes could change over the next 30 years, and what happens if you die before that 30 years is over. Another issue -- what if the lottery were to run out of money in that time period?
One of the biggest issues with the 30 year payout is estate taxes. If you died before all the installments were paid, your estate would be taxed 40% of the unpaid installments over $11.58 million. Your estate would have to pay those taxes even though the installments have not been paid out.
You could also choose to take a lump sum payout. Financial experts say, if you invest wisely, you could actually earn more money with this option. However, when getting the lump sum, the total prize value seems so little compared to the advertised jackpot. For example, the $1 billion jackpot for this drawing would only have a cash payout of about $497.3 million.
That $497.3 million would then be taxed by both the federal government and the state of Michigan. According to the lotterycritic.com website, the federal taxes are 24% and the state taxes are 4.25%. Using those percentages, that means Uncle Sam would take $119,352,000 and the state of Michigan would skim another $21,135,250 off the top of your winnings. So, for a $1 billion Powerball jackpot, your final lump sum check -- after taxes -- would be for $356,812,750 -- or about a third of the actual jackpot.
What are the odds of winning?
Not good! The odds of hitting the jackpot is 1 in 292.2 million.
The website gobankingrates.com says you have a better chance of...
- Being hit by a meteorite with odds of 1 in 1.6 million
- Dying in a Plane Crash with odds of 1 in 20 million
- Being killed by hornets, wasps or bees with odds of 1 in 54,093
- Scoring a hole in one with odds of 1 in 12,500
- Going to the hospital with Pogo-stick related injuries with odds of 1 in 115,300.
- Having Conjoined Twins with odds of 1 in 250 (for the women).
But, it only takes that one ticket, with all the right numbers, to walk away with millions of dollars. Will you be taking that chance? I am! If nothing else, it's fun to dream about how you would spend all that money!
For more information, visit the powerball.com website.