The Mega Millions Jackpot of March 2024

In March 2024, the Mega Millions jackpot reached a staggering $1.1 billion. This event marked it as the fifth-largest jackpot in history. Notably, there have been two billion-dollar jackpots in 2023, with one each in the years 2022, 2021, and 2018. As these jackpots become more frequent, an important question arises: which payout option should winners choose—cash or annuity?

Payout Options: Cash or Annuity?

Before delving into this dilemma, let’s first explore the payout options available to the fortunate winner of a $1.1 billion jackpot. The lucky individual matching all six numbers must decide between a lump sum of roughly $525.8 million or the full $1.1 billion, which would be distributed as an annuity over a period of 30 years.

Upon choosing the annuity, recipients will enjoy approximately $23 million annually after federal taxes are deducted. However, state taxes, depending on local laws, may still be applicable. Typically, many winners choose the lump sum, hoping to grow and invest their winnings promptly. Nonetheless, Mark Cuban, a noted billionaire and star of ABC’s "Shark Tank," advocates for the annuity approach.

Mark Cuban’s Argument for Annuities

Mark Cuban has historically advised lottery winners to select the annuity. He asserts, "Don’t take the lump sum. You don’t want to blow it all in one spot." Choosing the 30-year annuity could potentially result in a higher net income even after all tax obligations. Additionally, if a winner elects the lump sum with plans to invest, they would need to recover nearly half a billion dollars through their investments to match the annuity’s earnings—an uncertain venture. Cuban even discourages winners from making investments, saying, "You don’t become a smart investor when you win the lottery."

With safer financial management through the bank, Cuban believes winners can live comfortably without losing sleep over risky ventures. He argues, "You will sleep a lot better knowing you won’t lose the money."

More Than a Retirement Fund

Winning substantial amounts in the lottery, like a billion dollars or even a few hundred million, is far beyond what most aspire to achieve in their retirement accounts. So, when fortune smiles upon you with such colossal wealth, is investing truly necessary? Cuban believes it’s wiser to eschew risks and live off the secure annuity payments instead.

Sage Advice Beyond Finances

Yet, Cuban’s counsel extends beyond simply choosing annuity payments and avoiding investments. He offers practical advice for navigating the complex aftermath of lottery fortunes. Firstly, he suggests hiring a tax attorney to manage the intricacies of tax laws that can become more complicated with vast lottery winnings. This ensures that new-found prosperity alleviates stress rather than adding to it.

Further, he advises winners to prepare for a deluge of requests from friends and relatives. As he puts it, "Tell all your friends and relatives no. They will ask. Tell them no." Cuban underscores the importance of assessing genuine needs and consulting one’s accountant before offering financial help. "If you are close to them, you already know who needs help and what they need," he points out.

A Wise Path to Wealth

While winning a lottery is a dream for many, it isn’t the only route to wealth. For those keen on growing their wealth through traditional pathways or for today’s lucky winners, a financial advisor can prove invaluable. Such guidance can help assess one’s portfolio and chart a successful financial journey for the future.

In conclusion, Mark Cuban’s insights provide a clear-headed path for those who might experience the dizzying joy of sudden wealth. His advice is not just about preserving wealth momentarily but ensuring one’s financial security for a lifetime.

This article was originally published on Benzinga, reviewed and distributed by Stacker Media. You can read more here.