Huge jackpots make eye-catching headlines and encourage lottery sales, but the fact is that the top prize doesn’t necessarily get won in a single drawing. Instead, the jackpot will grow until the winning ticket is found, and the odds of striking it big are actually pretty small. Super-sized jackpots are designed that way – in part to drive sales, but also to create newsworthy publicity for the game, increasing its prominence on websites and newscasts.
The odds of winning the jackpot for a particular drawing are calculated by multiplying the number of tickets sold by the probability of matching all of the numbers on that ticket. The lower the odds, the higher the jackpot will be.
When choosing your lottery numbers, it’s best to stick with a random selection rather than using traditional patterns such as birthdates and anniversaries. While the chances of a lucky number appearing do improve when you choose common numbers such as 7, or those that represent a birthday, those who use those types of numbers will have to share their winnings with 20-40 other people, diminishing the amount they will take home.
Lottery winnings can be paid in a lump sum or as an annuity, with the latter resulting in annual payments over 30 years. The decision to take the lump sum or annuity depends on personal preferences and financial advice, according to Lisa Kirchenbauer, a certified financial planner at Omega Wealth Management in Arlington, Virginia. Generally speaking, a lump sum offers more immediate cash for investment and spending, while an annuity results in larger annual payments that increase over time.
If you win a large jackpot, you’ll want to put together a team of legal and financial professionals before deciding how you’d like to spend your newfound wealth. Putting together a plan can help you avoid any complications in the future and ensure you’re handling your jackpot responsibly. The first step is to secure your winnings in a safe place and consult with an attorney, accountant, and financial advisor.
While the initial plan may not be perfect, it will give you a good idea of what to expect when it comes to taxes and investing your money. If you do decide to invest your winnings, it’s a good idea to diversify your portfolio. That will help protect your investments against a potential market downturn.
In the United States, you’ll have to file a state income tax return if you win a lottery jackpot. The amount of tax you’ll owe will be determined by your home state, as well as any other states in which you’ve purchased lottery tickets or won a prize.