When you win the Powerball jackpot, you have a number of important decisions to make, including whether you want to receive your winnings in one cash lump sum or as an annuity to be paid out over 29 years. You have 60 days from the date of the winning draw to make this decision, and if you don't notify your state lottery of your choice within this period, you will be paid the annuity by default.
The choice of payment type is completely up to you, the winner. You might notice, though, that the cash lump sum payment is of a lower value than if the prize is paid out as an annuity. This is because the annuity payments are graduated, meaning they increase in value every year. The lump sum doesn't take these increases into account so you are just paid the cash value of the jackpot at the point you make your claim. Furthermore, the cash lump sum will always be less than the advertised jackpot, which is stated as the full annuity amount.
This is worth remembering for when you come to make the decision and see that the cash lump sum is worth tens – or even hundreds – of millions of dollars less than the annuity.
The lump sum option has proved the more popular one with jackpot winners in recent years, perhaps because they would prefer the financial security of having millions of dollars in their bank account. Here are some points to consider about the cash payout:
While the cash lump sum is the preferred option for many winners, annuities provide the most value for money as you get the full jackpot amount. Many winners may be concerned that something will happen – either to themselves or the lottery paying them out – before they receive all their money, but processes are in place to ensure that all winners are paid out in full. You should take the following into account when considering an annuity:
Your state lottery will offer the same level of support after your win regardless of which route you go down. However, it is always a good idea to seek expert financial advice before deciding whether to take the cash lump sum or the annuity, as your personal circumstances may make one option more beneficial than the other.