I have to admit that even I am pondering a win on the Powerball Lottery this week.
As of the time of writing the prize money fund for the jackpot stands at $1.5 Billion. Which would give one winner a payout of about $930 million.
For those of you who live outside the United States and are wondering about the difference between the headline payout and the actual winning payout, the answer is simple. Here in the U.S. lottery wins are taxed by the Federal government, many States also impose an income tax on lottery wins and even local governments sometimes impose a tax on lottery winnings.
So for American lottery winners the bad news is they lose a good chunk of winnings before they see the cash. I found this a big shock coming from the United Kingdom where lottery wins are seen in the more favorable light as an Act of God. To tax God would make no sense. So while most "Acts of God" are seen in a bad light, being struck by lightening and such insurance get out of paying clauses. Winning the lottery is a nice little earner for the winner alone, taxes only come in later when you start spending the winnings or earn interest from the winnings.
So What Would I do With $930 Million?
First bearing in mind California is a common property state I would see that my wife had her 50%. I know she has plans for her share.
I would also look for financial implications of course.
Then taking financial advice it seems most likely that I'd look to secure the major portion of the win in a pot to give me some regular income. I would look at only keeping an income around $5,000 per month here. I am not extravagant and could live on that.
The rest of the pot could fund a foundation. This appears to be a common policy for high earners such as NFL footballers and other sports stars.
The purpose of the foundation could be varied.
- I am very thankful that organizations like Guide Dogs for the Blind exist. So some of the foundation could make regular donations to guide dog organizations.
- Guide dogs also need veterniary care and veterinary school is pretty expensive. Here I might like to create a scholarship fund for a veterinary school student.
- Rural areas are often underserved by veterinary surgeons, so it might be possible to fund a veterinary graduate in creating a clinic in an underserved community.
- It would be nice to possibly fund a resource for those who go blind in their late teens or adulthood. From personal experience I have found these groups to be underserved outside major cities. This resource could educate, be a social meeting place and place of initial response after they lose their sight, pointing them to other resources and advocating for them..
What Would I Do for Myself?
By now I would be pretty much down to small change. Say $1 million.
Having sorted an income earlier I would be pretty secure. I might buy a house over by the coast, if I could. Not a mansion just a modest three or four bedroom to allow for guests. I am sure lots of friends and family would want to visit during the heat of a central valley summer.
I might buy a modest compact car for myself. Of course I would need a driver too. Wages for a driver may be an eligible deduction from the foundation. Or maybe I could fund a network of Google cars across the nation. This is a what if afterall.
If by any chance I do win the jackpot tonight. All $930 million, after tax. This would honestly be my blueprint. Whether it would work in reality, well we can leave that up to the lawyers and accountants. But it is nice to have a dream.
Let me know what you would do in the comments.