Powerball Jackpot is Biggest Ever — Is Cash or Annuity Better?

The annuity value of Saturday's Powerball jackpot is the largest ever offered in the United States at $1.6 billion.

The multi-state lottery game has not had a winner in 39 drawings dating back to August 3. The jackpot could grow higher before Saturday night's drawing at 10:59 p.m.

“Sales momentum has been off the charts both for our retailers and NH iLottery, and we expect that momentum to continue right up to the drawing Saturday night. We are projecting more than $6.5 million in Powerball sales this week alone. This is truly the opportunity of a lifetime," New Hampshire Lottery Executive Director Charlie McIntyre said in a statement.

“While we are certainly caught up in the excitement of this huge jackpot, we are also constantly reminding our players to play responsibly,” McIntyre added. “It only takes one to win!”

The cash value of the jackpot is $782.4 million, which brings up another question when you purchase your ticket: do you go for the annuity payout, which is paid in 30 annual installments, or the cash option, which is worth less but is paid at once?

Lump Sum or Annuity Payout?

Toms River, New Jersey, certified financial planner Lou Scatigna says there are positives and negatives to the annuity and cash payouts.

One plus for the cash option is that you get your winnings all at once and are not at the whim of the state's financial future.

"I have to be comfortable that the entity paying me over the next 20 years is financially viable to continue to do so. Say the state becomes bankrupt or has a financial crisis or depression and they can't make the payoff. Now you're just a creditor," Scatigna said. "If you get it all upfront, you can control your money."

The cash can be invested and ultimately provide more money than the annuity.

"There's no reason why properly invested, that that money shouldn't double every seven years," Scatigna said.

Downsides of All That Cash

But having all that money can also be bad. Scatigna said that winners of a typical jackpot have been known to blow all the cash in under 10 years. An annuity ensures you have a regular flow of cash and suggested that could be a better choice.

"The one thing about the annuities is it saves you from yourself because you get a fresh start at the beginning of every year when you get your payment," Scatigna said

The Psychology of Winning

The cash option can also lead some people down a dark path.

"If you're a gambler or if you have vices where that kind of money is going to destroy your life, then the annuity would be the default way you'd have to go," Scatigna said.

Scatigna advises that winners stay quiet about their good fortune, hire an accountant, financial planner and a therapist.

"Your life is gonna change in a way that you never saw possible. And it's things that you're gonna have to deal with that you certainly wouldn't have to deal with in a normal life," Scatigna said "You're close to a billionaire. You're Elon Musk, or at least a fraction of him, pretty much overnight."

The New Hampshire Lottery recommends signing your winning ticket and taking a picture of both sides before taking it to lottery headquarters.

Contact reporter Dan Alexander at Dan.Alexander@townsquaremedia.com or via Twitter @DanAlexanderNH