If You Win Mega Millions or Powerball, Should You Take the Cash Payout?

iStock.com/mphillips007
iStock.com/mphillips007

Mega Millions has reached a record-breaking jackpot of $1.6 billion, which means your individual chances of taking home the winnings are less than one in 300,000,000. (And, amazingly, Powerball is currently at a not-too-shabby $620 million.) But it doesn't hurt to be prepared: If your ticket matches the winning numbers, here's the first decision you need to make before your life changes.

While $1.6 billion is the number that's being advertised, Mega Millions won't be handing over a check for that amount to the winner. Whoever holds the winning lottery ticket will be given two options: They can collect their winnings as a one-time lump sum that's less than the value of the total jackpot (in this case, it would be $904,900,000), or they can receive the full amount in annual installments stretched out over 29 years. Winners who choose the installment or annuity plan will be given one large payment upfront followed by checks that grow by five percent each year.

Collecting the money and running is tempting, and it's the option that most lottery winners end up choosing. But according to money experts, that's the wrong move—not only because you're getting less money in the long run, but because it leaves you vulnerable to bad luck and poor financial planning. "If you get a huge lump sum, it's easier to make a mistake, whereas if you choose the annuity, then at least if you mess up and blow the first year's worth, you have another chance," financial planner Nick Coleman told CNBC last year.

Even Shark Tank investor Mark Cuban agrees that annuity is the safer bet. In 2016, he told the Dallas Morning News that it helps winners avoid blowing all their winnings at once.

No matter which option winners choose, they can't avoid losing a sizable chunk of their prize to taxes. After state and federal taxes, the lump sum of the latest Mega Millions jackpot will come out to between $607,000,000 and $687,724,000—and that's not including what the winner will have to pay come tax season. But if they opt for the annuity plan they'll end up with $1 to $1.2 billion after 29 years.

The Two Types of Millennials, and the Differences Between Them

undefined undefined / iStock via Getty Images
undefined undefined / iStock via Getty Images

Though often described in blanket terms, each Millennial's experience varies greatly. And it isn't just their age ranges and relationships to technology that divide the generation. According to one expert, American Millennials (anyone born between the years 1981 and 1996) fall into two subgroups based on their levels of success: "me-llennials" and "mega-llennials."

Center for Generational Kinetics president Jason Dorsey, who researches Millennials, told Business Insider that life paths and financial status may be a better indicator of the differences in members of this generation than the years they were born. According to him, the first group feels behind in their careers and other areas of adult life, while the second group feels right on track.

For the first group, he coined the term "me-llennials." These are Millennials who fit the common narrative surrounding the generation: They're dealing with stagnant wages and career paths, unaffordable housing, and mountains of student loan debt. The homeownership rate of Millennials today is 8 percent lower than that of Baby Boomers at the same age. National student loan debt, meanwhile, reached a record high of $1.5 trillion in 2019.

Millennials belonging to the second group are at a much different place in life. These so-called "mega-llennials" manage their bills, feel satisfied with their careers, and are overall more financially stable than other members of their generation. For these reasons, mega-llennials may not relate to the typical millennial experience that's often reported.

These trends indicate that the story of Millennials' progress is more complicated than it may seem. While the combination of steep bills and low wages may be worse for young people today than it was for older generations, the Millennials who aren't dealing with those hardships have an even greater advantage over their peers. The gap between these subgroups will only get wider: Millennials are set to inherit trillions in wealth over the coming decades.

[h/t Business Insider]

The University of Texas at San Antonio Is Offering Free Tuition to Thousands of Students

Prostock-Studio/iStock via Getty Images
Prostock-Studio/iStock via Getty Images

If you’re a resident of Texas with college ambitions but face some financial hardship, there’s good news coming out of the University of Texas at San Antonio. This week, the school announced a program called Bold Promise, which will cover tuition for thousands of students annually.

To be eligible, enrollees must be first-time freshmen living in the state, ranked in the top 25 percent of their high school class, and have graduated less than 16 months prior. Once enrolled, they must maintain a 2.5 grade point average each semester. The adjusted gross income of their family cannot exceed $50,500.

UTSA is currently ranked 293 to 381 by U.S. News and World Report in national universities. The school hosts roughly 32,264 students, with an average annual tuition of $9722 for Texans and $24,722 for out-of-state attendees. The acceptance rate is roughly 79 percent.

Incoming students have until January 15 to submit an application, but no separate Bold Promise form is required. The program officially begins with the fall 2020 semester and will cover four years of education. UTSA says the cost will be covered by scholarships, grants, and other exemptions on the state and federal levels. Students will also have the chance to apply for financial aid to cover boarding expenses. UTSA estimates 4000 students will be eligible for the program.

The University of Texas-Austin instituted a similar offer earlier this year, with free tuition for a four-year program offered to students with household incomes of $65,000 or less. Colleges in Michigan and New York have also implemented tuition programs.

[h/t KSAT]

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