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Powerball jackpot hits $1.2 billion. Which payout is best

The Powerball jackpot hit $1.2 billion on Oct. 3, 2023, the third-biggest prize in the game’s history.

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The Powerball jackpot has climbed to an estimated $1.2 billion — the third-largest prize in the game’s history — without a winner Monday night.

Among the winner’s big decisions will be the choice between a lump sum payout worth $551.7 million or an annuitized prize of $1.2 billion. Both options are pretax estimates.

The next Powerball drawing is Wednesday at 11 p.m. ET, and the odds of winning the jackpot are 1 in 292.2 million.

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While the lump sum provides a full prize up front, the annuity offers one immediate payment, followed by 29 annual payouts that increase 5% each year, according to Powerball.

The lump sum payout is ‘a mistake’

“Virtually everybody who wins the lottery picks the lump sum distribution,” said Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners. “And I think that’s a mistake.”

In many cases, the annuity is a better option because “the typical lottery winner doesn’t have the infrastructure in place to manage such a large sum so quickly,” he said.

The typical lottery winner doesn’t have the infrastructure in place to manage such a large sum so quickly.

Stoltmann said the annuity protects winners from first-, second- or third-year financial mistakes while keeping the majority of the proceeds safe. 

Weigh the long-term plan for winnings

“Flexibility and control over assets is a really good thing, but it’s not necessarily for everybody,” said certified financial planner and enrolled agent John Loyd, owner at The Wealth Planner in Fort Worth, Texas.

While the lump sum payout could be a good financial move for some winners, he agreed that others may benefit from the spending guardrails of annuitized payments.

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