A total of $1.6 billion dollars is on the line for the Mega Millions jackpot. A financial planner shared some advice in case Tuesday night’s drawing leads to a winner.
John Fawaz studies the numbers and the market as a Certified Financial Planner. If you happen to win that estimated $1.6 billion jackpot, he says the first thing is to get a good team around you including an attorney, a financial planner and someone in public relations to help you make a game plan for your winnings.
“Ideally you want to do the lump sum. Part of the reason is they figure out lifetime income. It’s based on two factors: one is longevity and the other is interest rates. Since people are living a lot longer and interest is at an all time low, the payout for the annual payout is really not the best way to go,” explained Fawaz.
By taking the lump sum, it means you’ll be taking a hit. Fawaz says you’ll lose about 44 percent of that $1.6 billion.
“For 2018 your income tax is about 37 percent and we also have a Medicare surtax that comes into for certain incomes. Now if you live in a state where they have a state income tax, that could be on top of the federal income tax and Medicare surtax you’ll have to pay.”
Despite that, you’ll still be taking home $600 to $700 million and it’s suggested you set aside some of it to play with, buy a car or a new home or take a vacation.
Fawaz says to invest the rest of your winnings.
“One suggestion with that kind of money, you can go into the safest investment at a three percent and you can generate enough interest and money from those investments that you can, it will sustain you a lifetime.”
While it’s fun to play the lottery, Fawaz says play it every once and awhile and be sensible when buying a ticket.
The SmartServ gas station in Farragut has had two big lottery winners recently. One person won $100,000 and over the weekend a man won $2 million in the Powerball jackpot.
Employees say their hearts skipped a beat when they found out they’d sold the winning Powerball ticket. Each time someone comes in to purchase a lottery ticket, promises are made, but employees say a man last week made a touching promise.
“He said, ‘If I win the big jackpot, your daughter is going to get the best education,’ and all my grandkids would get an education out of that ticket, so I guess that was the best thing he said and he thought of me and my family,” said cashier Monali Patel.
Despite the odds, people still made sure to purchase a Mega Millions ticket. Willie Clay said he stopped after seeing a sign for the jackpot and already has a plan on how he’d spend $1.6 billion.
“Take care of my family and close friends, actually I would donate some to charity, to cancer research and guess what I would probably still work a little bit just to have something to do.”