As the Mega Millions jackpot grows to a whopping $1 billion, many people are thinking about buying a lottery ticket or two. It’s understandable that lottery enthusiasts want to dream big. But it’s also important to keep in mind that you’re more likely to be hit by lightning or die in a plane crash than win the lottery.
Lottery odds are based on the number of winning numbers required and the size of the pool of available options. Buying more tickets won’t increase your odds of winning by much, as each new ticket adds to the overall pool. For example, 2by2 in North Dakota requires players to match four numbers out of 52 possibilities. The odds of winning that prize are 1 in 29. But if you bought 10 tickets, the odds of winning increased to 1 in 29.
A more effective way to improve your chances of winning the jackpot is to buy rare and hard-to-predict numbers. There are some numbers that are “hot” or “cold” and others that are “overdue.” But even if you select the hot and cold numbers, your odds of winning still remain extremely low. In fact, you’re almost 300 times more likely to get hit by lightning than win the jackpot.
If you were lucky enough to win the jackpot, you’d have the choice of taking a lump sum or an annuity. An annuity is a series of annual payments that begin after the winner claims the prize. But most winners choose the lump sum, which is a single payment of the prize money after taxes.
Regardless of which option you choose, it’s important to spend your winnings wisely. Setting aside a year’s salary in an emergency fund and saving for retirement are good first steps. Kovach says you should also avoid putting any of your winnings into risky investments. “You’re going to be approached with a lot of crazy investment advice,” she says, adding that most such recommendations will lose you money.
In addition to keeping your winnings in safe investments, it’s a good idea to protect your ticket and tell only a few people. This will help you avoid scammers and long-lost friends who think they deserve a piece of the action.
If you do win the jackpot, it’s a good idea to hire a tax accountant to help you sort out your federal and state income taxes. And don’t forget about your state lottery’s rules on how to distribute the prize money. Some states have special laws about how to handle large jackpots, and you may have to set up trusts or other structures to manage the funds properly.