The Powerball lottery is one of the biggest lottery games in the United States. The jackpot often climbs into the hundreds of millions of dollars, sometimes even exceeding $1 billion. Naturally, Powerball winners usually come into massive amounts of money overnight. But what happens after the initial shock and excitement of winning wears off? Here’s a look at what some of the biggest Powerball winners have chosen to do after hitting the jackpot.
How much do Powerball winners typically win?
Powerball jackpots start at $40 million and continue growing until someone wins. The largest Powerball jackpot to date was $1.586 billion, split between three winning tickets in January 2016. Other top Powerball jackpots include:
| Jackpot Amount | Winner(s) | Year Won |
|---|---|---|
| $758.7 million | 1 winner in Massachusetts | 2017 |
| $687.8 million | 2 winners in Iowa and New York | 2018 |
| $590.5 million | 1 winner in Florida | 2013 |
| $564.1 million | 1 winner in New Hampshire | 2018 |
| $487.0 million | 2 winners in Missouri and Arizona | 2016 |
As you can see, Powerball jackpots are usually split between multiple winning tickets. But even one third or one half of a massive jackpot is life changing money.
Do Powerball winners get the full jackpot amount?
No. Powerball jackpot amounts advertised are the annuity value, meaning the total amount the winner would receive if they chose to take their prize split over 30 annual payments. However, most big winners opt for the cash value lump sum payment instead.
The cash value is significantly lower than the annuity amount – usually somewhere around 60% of the advertised jackpot. Taxes are then taken out of the lump sum, reducing the final amount the winner takes home even further. Still, the cash options for huge Powerball jackpots are usually in the hundreds of millions of dollars.
What do most Powerball winners choose to do with their money?
Most Powerball winners don’t go on wild spending sprees, at least not right away. Some common themes emerge in what big jackpot winners choose to do with their windfall:
Pay off debt
One of the first things many winners do is pay off debt like mortgages, student loans, car loans, credit cards, etc. Eliminating debt provides a huge sense of relief and freedom.
Save and invest
Financial advisors usually recommend lottery winners put most of their money towards retirement savings and conservative investments. This ensures the money will last and even grow over time. Some winners have managed to turn their jackpots into over a billion dollars through smart investing.
Give to charity
Many winners donate a portion of their prize to charity. Causes supported include hospitals, education, their local community, and more. Establishing a charitable foundation is another popular option.
Take care of family
Winners often share part of their jackpot with family members or set up college funds for children and grandchildren. Family trips and new houses are common as well.
Make some luxury purchases
While winners try to be smart with the bulk of their money, most do treat themselves in moderation. Some common splurges include new houses, cars, vacations, and jewelry.
Notable examples of Powerball winners
Here are some real life examples of what winners have chosen to do after hitting big Powerball jackpots:
The Smith family (2016) – $429 million
This North Carolina family opted for the lump sum of $254.7 million after taxes. They spent a relatively modest amount on a new house and cars. The rest went towards investments and their children’s college funds.
Robert Bailey (2018) – $343 million
Bailey, a retired federal government employee from New York, immediately pledged to use his money to do good for others. He donated to his local food bank and started a foundation focused on veterans, education, and healthcare.
Franco (2016) – $187 million
Franco, who remained anonymous, donated about $3 million to various New Jersey hospitals where he had previously received treatment. He also gave $2 million to nonprofit organizations helping former drug addicts like himself.
Mavis Wanczyk (2017) – $758 million
At the time, Wanczyk’s jackpot was the largest ever won by a single Powerball ticket holder. The Massachusetts hospital worker chose a lump sum payment of $480 million after taxes. She reportedly donated 10% to charity and gave additional gifts to family. Her other plans included buying a new truck and taking a vacation.
West family (2016) – $528 million
This Tennessee couple appeared on national TV holding an oversized check for $327 million after splitting the record $1.6 billion jackpot three ways. They reportedly invested most of the money, but also made donations supporting St. Jude’s Children’s Research Hospital.
What not to do as a Powerball winner
While most Powerball winners end up living comfortably after hitting the jackpot, others struggle to manage their newfound wealth. Some things winners should avoid include:
- Making quick, unplanned major purchases – houses, cars, etc. should be considered carefully
- Being overly generous by giving too much money to family and friends
- Splurging on luxury items like yachts or rare jewelry on impulse
- Quitting jobs or making other sudden major life changes
- Trying overly sophisticated or risky investments they don’t fully understand
Essentially, the key is to take time to let the reality of their winnings sink in before making any huge financial decisions.
How long does a Powerball jackpot last?
With proper planning, Powerball winners should be set financially for life. Those who opt for an annuity receive annual payments over 30 years, providing stable income for decades to come. Even lump sum winners end up with hundreds of millions in the bank.
The key factors are:
- Not spending excessively or giving away too much right away
- Investing wisely – good financial advisors are a must
- Sticking to a reasonable budget for day-to-day living expenses and splurges
- Avoiding major losses by making bad business decisions or falling victim to scams
Winners who plan carefully and don’t go overboard on extravagant purchases should be able to make their money last.
Do people still work after winning Powerball?
Many winners end up quitting their regular jobs after taking home massive jackpots. Who wouldn’t want to retire early with hundreds of millions in the bank? However, work provides a sense of purpose and routine for some. Others pursue passion projects or start new businesses with their winnings. A few winners have kept working, at least for a while, for these reasons.
Some examples of winners who kept working include:
- Deborah McDonald, a stay-at-home mom who won $35.3 million in 1996, took a part-time job with a nonprofit helping mothers in need.
- Doug Lietzan, who won $34 million in 2009, continued running his painting business.
- Louise White, who won $41 million in 1993, kept her $7 per hour factory job, saying she didn’t know what else to do.
However, most winners eventually leave their jobs behind to enjoy their wealth and new opportunities full-time.
Do lottery winners pay taxes?
Yes, lottery wins are considered income so they are subject to both federal and state income tax, except in a few states that don’t have income tax. The top federal tax rate is 37% at present for income over $518,400 for single tax filers. State taxes vary but can be up to an additional 13%.
So combined federal and state taxes take out a significant chunk of major jackpots. Withholdings are taken out immediately at the time winners are paid. However, winners are sometimes still liable for additional taxes later. Thoroughly planning for taxes with professional help is essential.
Are Lottery winners happier?
Research on whether big lottery winners are happier than they were before yielding their windfall is mixed. Some studies show a temporary boost in overall happiness after winning the lottery, but it dissipates within months to a couple years. Part of this may be due to winners adapting to a luxury lifestyle.
One key danger is that money can strain relationships with family and friends. Some winners report being bombarded with requests for money from others. Envying by others and being viewed differently also complicates things.
In the end, money alone doesn’t guarantee happiness. But financial security does relieve stress and anxiety for many lottery winners, perhaps leading to increased overall contentment.
Do Powerball winners go broke?
There are some unfortunate cases of Powerball winners declaring bankruptcy or otherwise losing their entire fortunes. This is still relatively rare, however. Most winners that manage their money responsibly avoid going broke.
According to the National Endowment for Financial Education, about 30% of lottery winners end up bankrupt. Big factors that can lead to financial ruin include:
- Spending too lavishly on luxury purchases like mansions, sports cars, jewelry, etc.
- Overly generous giving to family, friends, or random requests from others
- Poor investing by making speculative or overly risky bets
- Failed business ventures due to lack of experience and poor judgment
- Costly divorces splitting assets
- Addictions to gambling, drugs, or alcohol
Carefully planning finances, staying grounded, and avoiding risky decisions reduces the chances winners will lose everything.
Famous examples of Powerball winners who lost big
Here are some cautionary tales of major Powerball winners who ended up losing their fortunes:
Jack Whittaker – $315 million (2002)
At the time, Whittaker held the record for the largest U.S. lottery jackpot won by a single ticket. Within just a few years, thieves and con artists took most of his money. He also made expensive business mistakes, like building a water park that failed. Whittaker said he regretted winning the lottery.
Gerald Muswagon – $10 million (1998)
Muswagon won $10 million in the Canadian lottery. He made lavish purchases like a new house with 8 big screen TVs. Just 7 years later, he took his own life after blowing through his entire fortune.
Janite Lee – $18 million (1993)
Lee won $18 million in the Illinois lottery. Over the next decade, she donated millions to political causes and spent the rest on mansions and other luxuries. By 2001, Lee had filed for bankruptcy.
William Post – $16.2 million (1988)
Post declared bankruptcy within 3 years after winning his $16.2 million jackpot. Excessive spending on cars, houses, and even a plane contributed to his downfall. His own brother also sued him for part of the money.
Key takeaways on what Powerball winners should do
The best course of action for Powerball winners includes:
- Taking time to fully grasp their new financial reality before making big moves
- Paying off debt, modest splurges, charitable giving, and sharing with family in moderation
- Investing the bulk of winnings wisely for long-term growth
- Consulting qualified financial planners, accountants, and lawyers
- Maintaining perspective and their values
- Avoiding overly lavish purchases that could quickly drain their newfound wealth
With prudent financial management and reasonable expectations, Powerball winners should enjoy comfortable lives for decades to come and leave lasting legacies for their loved ones.
Conclusion
Winning a massive Powerball jackpot can be life-changing in many ways. While everyone dreams of hitting it big, managing hundreds of millions of dollars in newfound wealth comes with challenges. The difference between living comfortably versus losing it all comes down to smart planning.
Most winners focus on paying off debt, making charitable contributions, taking care of family, and making modest personal purchases. Investing the bulk of their windfall allows for long-term growth. Maintaining perspective and avoiding excess extravagance are also keys to making Powerball money last.
With the right priorities and discipline, the biggest prize can set up winners and their families for generations. While the lucky numbers may come down to chance, creating lasting success after hitting the jackpot takes wisdom.