Tips for Lottery Winners (and Everyone Else)

Instant Fortune

A very lucky Powerball player won $1.326 billion last Saturday, the fourth largest jackpot in Powerball history. Who owns the winning ticket, purchased in Oregon, is still a mystery.

But becoming an overnight billionaire, or millionaire after taxes, isn’t always a dream come true. History is littered with lottery winners who squandered their wealth, either by living too large or making ill-advised investment choices.

What Happens When You Win the Lottery?

Buying lottery tickets might not be the best long-term investment strategy. The odds for winning Powerball are 1 in 292 million. Even so, many economists agree that given the low upfront cost of a lottery ticket, it is worth the fun even if the chance to win is slim.

If you do win, you can choose to stay anonymous in 18 states, which is great for keeping grifters at bay. Other states announce all winners to promote transparency.

One of the most important decisions for lottery winners is whether to accept their money in one lump sum, or receive an initial amount plus 29 annual payments. The choice may be determined by immediate financial needs, investing acumen, and state tax rules.

The federal government regards lottery winnings as taxable income. Most states do as well, including Oregon, which will take 8% of the recent winner’s prize. California doesn’t, which was great news for the person who took home Powerball’s largest jackpot in 2022: $2.04 billion.

Making the Most of a Windfall

Whether you win the lottery, inherit money, or get a huge bonus, there are smart things you can do with an unexpected cash windfall. First, don’t rush any decisions and think about what will benefit you long-term.

Next, you might think about finding a financial advisor to help you make a long-term plan, invest your money, navigate taxes, and create a budget. While a solid budget fit for your needs is always a good idea, it’s especially important if you land a large sum, even if it’s smaller than $1.326 billion.

Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!

Check it out

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.

Communication of SoFi Wealth LLC an SEC Registered Investment Advisor

SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.
SOSS24041003