Ever wonder what happens when you win the lottery? You probably thought about what you would do with all the money when you win the lottery. But what to do if you win big?
Some experts say you may want to wait a bit and figure out a plan, if you don’t already have a plan.
If you win the lottery, you may have up to one year to claim the winning prize, depending on the state you are in. You simply need to show that you have the winning ticket to be identified as a winner of the lottery. You sign the ticket(s) and take a photo/video, or present them in person.
Then comes the next big questions. Do you want the annuity prize or do you take the lump sum cash winnings? Each have their own advantages.
The annuity prize means you don’t get access to all winnings at the same time, but every year you get a fixed amount of the winnings over a fixed number of years. It has a higher face value than the cash amount, because you pay less tax on it. But that also depends on what you have planned, or were planning on doing with the cash prize. If you were planning to invest the cash prize over time, you may be making more with your investment strategy that via the annuity price.
However, the cash lump sum winnings can have the IRS tax you with 40% of those winnings. That does not yet include an additional state tax, depending on which state lottery you win. New York, for example, charges a 13% lottery tax when you win the lottery.
Maybe there is a story you want to tell the press, in case you can not stay anonymous in your state. In this case, it is wise to know what you do and do not want to say and prepare your answers well. It may also be smart to consult a financial advisor when you win the lottery. Some sound financial advice can save a lot of headaches later on, especially when you try to invest the money or plan for retirement.
Forbes compiles a list of 10 Things To Do When You Win the Lottery. It is well worth the read.
If you have any other tips on what to do when you win the lottery, please let us know in the comment section below.
Best of luck!