As Powerball reaches $1.2 billion, here's how to save, invest jackpot
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As the Powerball jackpot rises over $1 billion, what are the odds of someone blowing through their winnings?
Very likely, according to experts.
Lottery winners are more likely to declare bankruptcy within three to five years than the average American, according to journal and book publisher MIT Press Direct. Experts say if you win and don't contact a reputable tax professional and a reputable investment adviser, you could land yourself in financial trouble.
However, that hasn't stopped people from trying to win the fourth-largest U.S. jackpot in history. The Powerball is currently worth an estimated $1.2 billion with a cash value of $596.7 billion, according to powerball.com.
The top prize ranks as Powerball's second-highest jackpot ever, behind the $1.586 billion prize that was split between three tickets in 2016.
The winning numbers from Monday's drawing were 13, 19, 36, 39 and 59. The red Powerball was 13 and the Power Play was 3X. While there were no jackpot winners, there were $2 million winners in Florida, New York and Oklahoma and $1 million winners in California, Florida, Indiana, Michigan, New York, Ohio and Texas.
The next drawing will be Wednesday at 10:59 p.m.
Why do lottery winners go bankrupt?
When people experience unexpected windfalls, they are more likely to quickly spend their winnings, according to Jay Zagorsky, a former economist and research scientist at Ohio State University who is now a clinical associate professor at Boston University.
Additionally, people in their 20s, 30s and 40s who were given an inheritance or large financial gift quickly lost half the money through spending or poor investments, he wrote for online publication The Conversation in 2016. The age group for lottery players peaks between the ages of 30-39, with people older than 39 less likely to play.
Don McNay, a financial consultant to lottery winners, said this is because many winners are going through divorce, depression and suicide, reported CNBC in 2017.
Another challenge winners face are family and friends looking to receive a share of the jackpot, which could even lead to murder.
This happened to lottery winner William Bud Post in 1988. According to USA Today, Post won Pennsylvania's $16.2 million jackpot, which was the start of a series of unfortunate events for him. His ex-girlfriend sued him for a share of the winnings and won, and his brother hired a hitman in an effort to inherit part of the cash. Other relatives spent months demanding money. Within a month of winning, Post filed for bankruptcy and had $1 million in debt.
Ways winners can save their lottery jackpot
For those who want to spend — and save — their money wisely, winners can invest 40% of the money in municipal bonds, where returns would be free of federal and in some cases, state and local taxes, reported The Washington Post.
Another 30% could then be invested in dividend paying stocks from high-quality companies, 15% in commercial real estate and rental properties, 10% in alternative markets such as gold and the rest held in cash.
People can also choose to receive their money in installments over time instead of a lump-sum payout.
