There was no winner in last night’s $1 billion dollar Mega Millions drawing, so the projected jackpot for Tuesday at $1.6 billion. That’s Billion with a B. What’s even more shocking is that the mega ball last night was lucky number 7. Tuesday’s jackpot is a new record, surpassing the $1.586 billion dollar prize in January 2016. That jackpot was shared by three winners in three different states.
The estimated cash option for the jackpot is $905 million. The top federal tax rate on income over $500,000 ($600,000 for married couples) is 37%, so the winner will owe almost $335 million in federal taxes. Most states will charge additional income taxes on the award. Suffice it to say, a single winner on Tuesday stands to take home a little more than half a billion dollars.
Have you ever thought about what you would do if you won a large lottery jackpot? I admit, I have. When the jackpots are high I occasionally buy a quick pick or two. I think about a few luxuries I would indulge in with the prize; a live-in nanny, a private jet subscription, an apartment in Manhattan. But then I start to think about all the work I’d need to do to set my affairs in order. I know, this is something only a nerdy financial planner would think about, but in the words of Biggie Smalls – “Mo Money, Mo Problems”.
I would need a new will and estate plan, and I’d need to create numerous trusts and entities to protect my assets. I would probably establish a family foundation because, let’s face it, there’s no way I’m going to be able to spend all that money. I would need a whole bunch of additional insurance coverage, especially liability insurance because now I have a whole lot to lose. I would have to hire a new CPA because there’s no way I’m filing my own taxes with the new bullseye painted on my back.
Did I mention that lottery winners do not have the option to be anonymous? Now everyone I know and a whole bunch of people I don’t remember will know that I have hundreds of millions of dollars. I’m sure every insurance agent within 200 miles would try to call. Luckily, I wouldn’t worry about getting ripped off by a “financial advisor”, but I can’t imagine how scary it is for most lottery winners to figure out how to invest.
As much fun as it would be to travel the world and check everything off my bucket list, I don’t think the money could replace what winning the lottery would take away from me; the sense of accomplishment for creating it on my own. What would life become without that drive? Without something to strive for, why would I get out of bed in the morning? I think that, after the joy of winning wore off, I would be lost.
The majority of Americans hate their job, and median household income for a family of four is only $56,000. Even though America is the land of opportunity, very few people rise out of the socioeconomic level in to which they were born. I hope that the winner(s) of this jackpot will be free to live their most fulfilling life. Unfortunately, the statistics on past lottery winners show that’s likely not to be the case.