Think you’re a sure bet to win an estimated $1.2 billion Powerball jackpot? Winners of giant jackpots nearly always take the cash, and financial advisers say that might be a mistake.
DES MOINES, Iowa — — Think you're a sure bet for Wednesday night's estimatedIf so, you need to decide whether to take cash, which would actually pay out $596.7 million, or choose the $1.2 billion annuity option that is twice as large but is paid out over 29 years.nearly always take the cash, and financial advisers say that might be a mistake.
The gulf between the cash and annuity options has become larger because inflation has prompted a rise in interest rates, which in turn results in potentially larger investment gains. With annuities, the jackpot cash is essentially invested and then paid out to winners over three decades. “If you think you can beat the 4.3%, you should take the cash,” Keil said. “If you don’t, take the annuity.”
Charles Williams of Chicago, who buys a Powerball ticket each week and always plays the same numbers, was adamant that he'd take the cash option. All that losing has let the Powerball jackpot grow to be the fourth-largest in U.S. history. If no one wins Wednesday night, the jackpotever, topping a $1.586 billion Powerball prize won by three ticket holders in 2016.
“If you go to a financial person and say you want to invest $1 billion, the financial person will say take the $600 million and we’ll pay taxes on it, you’ll have $300 million left over and I’ll invest it for you,” Chancey said. “That investment adviser will get fees off managing that money.”
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