Powerball: Are you a winner?
It’s been a frenzy of Powerball ticket purchases over the past week as the jackpot ballooned from $40 million to $500 million to $1.5B before last night’s drawing. Everyone’s been talking about it. It’s fun to dream about spending the winnings starting from the practical and reaching for the outrageous. And it’s great dialogue to have about statistics, probability and gambling.
Everyone I know got swept up in the fun and bought a ticket, except me. I almost bought a ticket but was afraid that winning might ruin my life. We’ve all heard stories of winners ending up bankrupt after their long lost friends and family picked them dry of people who wished they’d never won for all the problems it brought. Who wants that hassle. I didn’t play because I was afraid that I might win. Logical?!
I didn’t play but I did learn a lot. I learned that the odds of winning the jackpot are akin to flipping a quarter and having it land on the same side twenty-eight times in a row. That’s easier to relate to than the flat stat of the winning odds are 1 in 292 million. I know I can’t flip heads twenty-eight times in a row so I know I can’t win the jackpot prize. But I might. I could happen right?
I learned that the actual take home is much smaller than the billboard advertisement. The $1.5 billion jackpot is the total amount paid if the winner chooses the annuity. What?! I see $1.5 billion, I’m thinking that’s my lump sum. Here’s how it breaks down: $1.5 billion is actually $930 million as a lump sum and only $562 million after a 40% federal tax bite. State and local taxes shave off another 15% or $140 million leaving the winner with $422. Not bad, but a far cry from the $1.5 billion frenzy feeding advertised amount. Still feel like a winner?
How would we spend the measly $422 million? The kids wanted cars, lots of fancy cars. I wanted a housekeeper, a gardener, a backyard pergola, but mostly to travel. I learned that none of us wanted to move out of our town or even our house (although the kids pushed for a bigger one). We didn’t win the jackpot but we talked about where we live and realized we wouldn’t change a thing. That’s a big win.