Assuming that somebody has the lucky number for Wednesday’s $500 million Powerball jackpot, the winner might want to use some of their newfound fortune to lobby Congress. The fiscal cliff could put a dent in the prize money, financial advisers say.
In years past, some investing pros recommended lottery winners spread the payment out over several years to avoid blowing through the prize too quickly. But given the negotiations in Washington to avert the double blow of expiring tax breaks and automatic spending cuts next year, taking the lump sum of roughly $327 million, before taxes, may now be the best move, says Matthew Goff, a financial adviser in Houston. While that figure seems small compared to the total prize, which would be awarded over a period of 30 years for those who took the annuity option, a lump sum “could save you millions in taxes,” says Goff.
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